Bitcoin Bullish Signal: Exchange Reserve Loses Another 50k BTC Over Past Week

Keshav Verma

3 years ago

3 mins read

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On-chain data shows the Bitcoin exchange reserve has lost another 50k BTC over the past week, a sign that could be bullish for the price of the crypto.

Bitcoin Exchange Reserve Continues To Observe Further Decline In Recent Weeks

As pointed out by an analyst in a CryptoQuant post, 50k BTC in net outflows has exited exchange wallets over the past week.

The “all exchanges reserve” is an indicator that measures the total amount of Bitcoin stored in wallets of all centralized exchanges.

When the value of this metric goes up, it means the supply on exchanges is rising as investors deposit a net amount of coins. Such a trend may be bearish for the price of the coin as holders usually transfer to exchanges for selling purposes.

On the other hand, the reserve’s value decreasing implies that a net amount of Bitcoin is exiting exchange wallets at the moment. This kind of trend when sustained over a period can prove to be bullish for the coin’s price as it may be a sign that investors are accumulating.

Related Reading | Current Stretch Of Bitcoin Fear Surpasses 2021 Selloff

Now, here is a chart that shows the trend in the BTC exchange reserve over the past few months:

Looks like the value of the indicator has sharply gone down recently | Source: CryptoQuant

As you can see in the above graph, the Bitcoin exchange reserve has been going down over the last few months. In the past week alone, the metric has dropped 50k BTC in value. The last couple of days especially saw large downward spikes amounting to around 10k to 11k BTC.

The exchange reserve has traditionally been considered the “selling supply” of the coin. As it has been shrinking for a while now, the effect on the price should be positive due to supply-demand dynamics.

Some have referred to this decline as creating a “supply shock” in the market. However, recent data suggests that the reserve is no longer the main source of selling pressure, coins exiting from exchanges have instead just shifted into investment vehicles like ETFs.

Nonetheless, the reserve declining does reduce part of the selling supply so the net effect of such a trend may still be bullish.

BTC Price

At the time of writing, Bitcoin’s price floats around $41k, up 5% in the past week. Over the last month, the crypto has lost 6% in value.

The below chart shows the trend in the price of the coin over the past five days.

The price of Bitcoin seems to have seen a surge over the last couple of days | Source: BTCUSD on TradingView

Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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