Bitcoin’s (BTC) foreign exchange reserves continue to decline as analysts spot the trend towards a shortage of sellers. Since the crash in March, the stock exchange reserves have fallen rapidly from 2,950,000 BTC to 2,700,000 BTC.
In just seven months, a 250,000 BTC drop in foreign exchange reserves translates into a $ 2.85 billion drop. There could be two main factors behind the steep trend: a decline in sellers and lower confidence in the exchanges.
Bitcoin reserves on exchanges. Source: Glassnode
Does the number of Bitcoin sellers decrease in an accumulation phase?
Analysts attribute the ongoing decline in Bitcoin currency reserves mainly to a general lack of sellers in the market.
Since retail sellers are not selling BTC at current prices, institutions are also buying more BTC. The simultaneous decrease in selling pressure and an increase in buyer demand are an optimistic trend for Bitcoin.
A pseudonymous trader named “Oddgems” said the data shows that Bitcoin is likely to migrate from exchanges to non-custody wallets. If so, it suggests that investors are shifting their funds for an extended period of time. He
More and more #Bitcoin getting out from exchanges and most probably being transferred to non-custodial wallets.— oddgems.Ⓝ.ᕫ.🅑.₿.Ξ.✤.🌊.⚖.🌹.🐜.🌋 (@oddgems) October 17, 2020
This suggests slightly lower liquidity and lower selling pressure going forward.
Source @glassnode pic.twitter.com/tBTRWV7yY6
“More and more #Bitcoin is coming out of the exchange and is most likely being transferred to unprotected wallets. This suggests slightly lower liquidity and lower selling pressure going forward. ”
Michael van de Poppe, a full-time trader on the Amsterdam Stock Exchange, repeated the stance.
He stressed that BTC outflows from exchanges are increasing as institutions’ cash reserves flow into Bitcoin. He
“To be honest, more and more $ BTC is going from exchanges to storing cold wallets. Large publicly traded companies that allocate cash reserves on BTC. Is incredibly bullish. ”
The concurrence of stagnant retail outflows from Bitcoin and continued demand from institutions are fueling the general sentiment regarding BTC.
Dan Tapiero, co-founder of 10T Holdings, also said that “bitcoin bottlenecks” are possible due to growing institutional interest.
Other supply metrics indicate higher HODLer activity
According to Glassnode, a large part of the Bitcoin supply is stored in “accumulation addresses”. These addresses represent users who have never removed BTC from their wallets and who are likely to store BTC for the long term.
When “HODLing” activity is high, meaning that BTC is held for extended periods of time, this typically indicates the beginning of an accumulation phase. Glass knot
#Bitcoin accumulation has been on a constant upwards trend for months.— glassnode (@glassnode) October 14, 2020
2.6M $BTC (14% of supply) are currently held in accumulation addresses.
Accumulation addresses are defined as addresses that have at least 2 incoming txs and have never spent BTC.https://t.co/VEt4a503ae pic.twitter.com/QhGqmxpv2S
“Bitcoin accumulation has been in a constant upward trend for months. 2.6 million USD BTC (14% of the offer) are currently held in bulk addresses. Accumulation addresses are addresses that have at least two incoming shipments and have never issued BTC. “
The positive fundamental on-chain metrics complement the favorable technical structure of Bitcoin. Despite various events that could have put selling pressure on BTC, including the BitMEX probe and OKEx payout suspension, BTC remains above $ 11,400.
The BitMEX and OKEx controversy also resulted in a sharp drop in foreign exchange reserves, potentially terrifying traders. Although BitMEX is fast
and OKEx wallets have no outflows. The regulatory uncertainty was enough to cause foreign exchange reserves to slide.
BitMEX has never been hacked. Why not?— Jameson Lopp (@lopp) October 1, 2020
They don't have a hot wallet. There's nothing online to hack.
Instead, withdrawal requests are handled once every 24 hours via a manual multisig process.
If tomorrow's withdraw occurs, funds are SAFU.https://t.co/AzZAlesnYi
In early October, technical analysts identified the $ 11,100-11,300 area as the critical short-term resistance area. BTC has been relatively stable above this range, which is technically a positive sign of renewed momentum.
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