How BTC Held On Exchanges Matches Bitcoin’s Deadliest Drop Yet

Tony "The Bull" Severino

1 year ago

3 mins read

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Several signs indicate that Bitcoin is potentially on the brink of a new bull market, and much higher prices are ahead. However, one seemingly bullish sign that investors are preparing for mark up, is actually at the same level as just prior to the collapse to the cryptocurrency’s bottom.

Are looks this deceiving, and Bitcoin is about to take a similar plunge once again? Or is this potentially bullish signal the first real indication that the bull run is here?

Investors Move BTC Off Of Crypto Exchanges At Hastening Rates

Although Bitcoin is valuable to different people for many different reasons, chiefly, the asset’s valuation is derived from its digital scarcity.

Valuation models like the stock-to-flow method look closely at the total BTC supply in relation to where it is in the asset’s market cycle and each block reward halving. This theory suggests that as the supply is reduced, demand rises, and so do prices.

In advance of this expectation, crypto investors, particularly whales, have been moving their BTC off of exchanges and into privately owned wallets either through cold storage or on the web.

The crypto community has been high fives all around since this first began starting on Black Thursday, believing its a sign that more and more investors are holding for the long haul.

But, this metric measuring how much BTC is held on exchanges is currently the same exact level that led to the November 2018 plummet to Bitcoin’s bear market bottom.

If moving BTC off exchanges is a sign of a bull run beginning, then why did this level in the past trigger such a selloff?

Total Supply Matches Bitcoin’s Worst Drop Yet: Why This Time Is Different

According to blockchain data from glassnode, reported by Arcane Research, the total sum of BTC held on exchanges totals 2.57 million Bitcoin.

And while this is indeed a decrease of 375,000 BTC since Black Thursday, the total number matches November 2018, just as Bitcoin fell to its bear market bottom of $3,200.

BTCUSD November 2018 Versus September 2020 Same Bitcoin Exchange Supply | Source: TradingView

Could Bitcoin be about to take a similar plunge, or is this time different? For one, the last time the crypto asset held on exchanges reached this total, it was on the way up as more and more investors moved the asset to exchanges to sell it.

This time around, the metric is coming back down, suggesting a pattern of holding behavior. Arcane Research notes that as many as 100,000 BTC has moved into the Ethereum protocol, which explains at least a quarter of the outflow.

While this very well does match up with a level that led to a histric collapse in the past, the fact the stastic is falling not climbing could indicate that investors are indeed expecting higher prices. And with less BTC sitting on exchanges ready to be sold, the fewer chances exist for weak hands to panic sell at the first sign of danger.

Featured image from DepositPhotos, Charts from TradingView and Arcane Research

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

Tony is also celebrated for his literary contributions to the field. He is the author of the highest-rated Crypto Trading Journal on Amazon.com, a testament to his ability to communicate complex trading concepts in an accessible manner. This journal is widely regarded as an essential tool for traders aiming to track their progress and refine their strategies.

Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

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