Liquidity on crypto exchanges are falling

[MusaMohamed]

In the On-chain week 47 report, Glassnode reported BTC Exchange Liquidity Continues on its Downward Trajectory

The report impressed me that liquidity is continuously falling in this year, since the beginning. Does it come from institutional investments this year? They are whales, they are institutes and they do long term investment. After they bought bitcoin, they hold it and it causes drops in liquidity on exchanges. They bought more bitcoin than total bitcoin were mined by miners and more non-institutional whales decided to hold their bitcoin for Moon.

The number of BTC on exchanges has been on a near-continuous downward trend since the beginning of 2020, dropping by nearly 20% throughout the year. Since October, the withdrawal of bitcoin from exchanges has become even more rapid as BTC's price has increased more steeply.

[1714199145]

1714199145

[1714199145]

1714199145

[Wind_FURY]

Then good news! For everyone who can't decide to buy Bitcoin currently because "it's too high", you should simply wait for the DIP.

[Dave1]

This is pretty obvious, whales are withdrawing their btc on exchanges because we are indeed in a bull run. They don't want their btc to be stuck on exchanges because of hacking going around and exchange selectively holding whales account and you can't do anything about it.

So yes, good sign that we are really in a bull market and this will continue, proportionate to btc price increase in the future.

[davis196]

This is normal.In a bull market,most of the traders decide to HODL rather than selling their coins.
However,on the long term,the market liquidity going down is a sign that the prices might go down as well,due to the lack of a growing demand,which supports the price growth.
I don't know how accurate is this data and can we trust it,since most cryptocurrency exchange platforms are faking their trading volume in the last few years.Perhaps the exchanges are erasing their fake trading volume.

[Upgrade00]

However,on the long term,the market liquidity going down is a sign that the prices might go down as well,due to the lack of a growing demand,which supports the price growth.

There has been no shortage of demand yet, between institutional investors and public companies, there has been a very high demand for Bitcoin for majority of the year. The perceived drop in liquidity is being caused by a shortage of sellers, rather than a shortage of buyers, which would indicate a potential increase in the price.

I don't know how accurate is this data and can we trust it,since most cryptocurrency exchange platforms are faking their trading volume in the last few years.Perhaps the exchanges are erasing their fake trading volume.

These transactions happen on chain, so it is easy to check and verify, one just has to identify exchange and private wallets. In the case of internal trades, they are off chain transactions and as such can be faked. For them to erase fake volume, it needs to have existed in the first place, inorder to appear on the chain.

[target]

Big investors are likely buying on OTC and some withdrawing from exchanges. Everyone is holding while prices go up.

The halving effect is now also felt when few BTC goes into the exchanges. Less BTC while the demand still remains high made the prices go up but don't you think it's because Paypal had bought the virgin BTC from miners?

[ololajulo]

Then good news! For everyone who can't decide to buy Bitcoin currently because "it's too high", you should simply wait for the DIP.

The dip wont be less than 10k which still keep it expensive for all new traders. I think anyone interested can buy any amount according what he has. I dont consider the liquidity to be low we only have more people buying than selling, they also withdraw most of there purchase. It is wise to study the market and follow suit with what experience traders are doing. There is more flipping in the market and will continue for several months now to accumulate bitcoin and ethereum by traders.

[mk4]

Good. It probably means that holders probably has stopped attempting to trade, and just withdraw their funds on their(hopefully) non-custodial wallets. My guess that these are probably old bitcoiners though, as the numbers on Google trends haven't really gone that much up yet compared to December 2017 levels.

[Wind_FURY]

Then good news! For everyone who can't decide to buy Bitcoin currently because "it's too high", you should simply wait for the DIP.

The dip wont be less than 10k which still keep it expensive for all new traders. I think anyone interested can buy any amount according what he has.

When will it not be expensive? "Expensive" was also said when Bitcoin was priced at $3,000, $5,000, $10,000, but here it is now.

Plus I believe the people who said it "was expensive", and didn't buy during the dip, were the same people who bought higher than $10,000 because FOMO.

[dhemasm]

Maybe, Looks like More institutional investor looking for other alternative investment option and the one of them is Bitcoin, As we know this Pandemic was have an significant Impact on crypto Market especially Bitcoin and in the stock there is a negative trend as far as i know. It was good news I suppose especially for Crypto community, I just hope this trend will becoming an good start for the next year market trend too.

[mailuan]

The halving effect is now also felt when few BTC goes into the exchanges. Less BTC while the demand still remains high made the prices go up but don't you think it's because Paypal had bought the virgin BTC from miners?
)

[BLU]

Bitcoin is getting more scarce and expensive, liquidity on regular exchanges has been low for quite long time. Probably there will be time when price for 1 satoshi will be $20k

[yazher]

Big investors are likely buying on OTC and some withdrawing from exchanges. Everyone is holding while prices go up.

The halving effect is now also felt when few BTC goes into the exchanges. Less BTC while the demand still remains high made the prices go up but don't you think it's because Paypal had bought the virgin BTC from miners?

This is what makes the market pump into almost $20,000 and so far it is a good news for us. nevertheless, demands are high and the amount of bitcoin in the market are less. those who holds their BTC on their hard wallets right now are simply waiting for the price to rise even more than the current market situation. This will be the best year of Bitcoin we ever had in the entire crypto history because the price is not falling while it's rising continuously every week.

[jademaxsuy]

Yes, it may be dropping but this is what we wanted right? That everyone will going to have bitcoins in their digital wallet. I disagree that only whales could do it to leaving exchanges that drop the bitcoin liquidity. There are actually many who are new to bitcoin holders as paypal brought bitcoin to its users more easily using their platform. So, it is not the whales are doing it instead it is the people that bought bitcoin even at the current market. Whales are smart and they do not buy bitcoin at higher market price so this is not their doings for sure.

[dificanovi]

yes bitcoin liquidity continues to decline because investors continue to buy bitcoin and hold it for the long term, this can make buyers less. people who want to buy bitcoin are delayed because the price of bitcoin is very expensive, hopefully the liquidity on the exchange can go up again so that bitcoin buying and selling transactions continue to run smoothly.

[witcher_sense]

It should no surprise that liquidity on crypto exchanges keeps plummeting. The number of individual hodlers is growing, the number of institutional investors willing to acquire bitcoin is growing, the number of sagacious institutional investors, who have already bought bitcoin as a reserve asset, has significantly increased too. These all are strong hands, which means they are going to keep their bitcoins as long as they see fit, probably even decades or so. Weak hands, on the other hand, have already cashed out right after Bitcoin has reached 14000$. Naturally, they are not eager to buy "expensive" bitcoin after an unexpected price surge and started trading shitcoins instead. This is good news for bitcoin, the situation indicates that the growth potential of bitcoin is practically unlimited. The stronger the hands of the people holding bitcoin, the stronger bitcoin becomes.

[MusaMohamed]

For everyone who can't decide to buy Bitcoin currently because "it's too high", you should simply wait for the DIP.

Dips are time to accumulate bitcoin with Dollar cost averaging method. In the bull run, if the price dives to $13k it is the last time accumulate bitcoin and wait for the breaks through $20k or $50k next year.

This is pretty obvious, whales are withdrawing their btc on exchanges because we are indeed in a bull run. They don't want their btc to be stuck on exchanges because of hacking going around and exchange selectively holding whales account and you can't do anything about it.

So yes, good sign that we are really in a bull market and this will continue, proportionate to btc price increase in the future.

Good sign of something big for bitcoin and bitcoin holders. Withdraw bitcoin from exchanges and store them in cold wallets or non-custodial wallets is good to prevent sudden loss from scam exchanges, hacks on exchanges without compensation for customers.

Big investors are likely buying on OTC and some withdrawing from exchanges. Everyone is holding while prices go up.

I don't believe OTC market is first priority for big investors. OTC market has many risks: money laundering, scams, ... Big investors will use services from trusted companeis such as Grayscale as their channels to invest bitcoin.

More Institutions Are Buying Bitcoin, Say JPMorgan Analysts

They said institutional investors are looking at bitcoin as a long-term investment. As proof, they cited the growing size in Q4 of Grayscale Bitcoin Trust, whose customers are mostly institutional.

[Walterhank]

Big institutions jumping in to buy crypto is good but at the same time bad due to the similar reasons highlighted by you. If they have something planned behind the scenes then it could be a major drawback for all the traders/investors.

[XZERO1]

I'm guessing they did not count Uniswap and other platforms like that as a exchange, I think the majority of missing liquidity on exchanges are due to the popularity of Uniswap and other decentralized exchanges in 2020.

Now most of the bigger traders don't need to register for a exchange and accept their sometimes nonsense TOS and being asked to complete KYC basically whenever the exchange requires them to and take the risk of their funds being stolen, Uniswap and other platforms like that are probably getting those lost liquidity on exchanges.