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Breaking News: Coinbase Confirms DOJ Investigation Following Major Security Incident

Bitcoin Exchange Reserve Has Now Reached An Equilibrium After 2 Years Of Downtrend

Keshav Verma
Keshav Verma
3 years ago
3 mins read
Bitcoin

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On-chain data shows the percentage of Bitcoin supply on exchanges seems to have plateaued over the past few months, ending an overall downtrend that lasted about two years.

Bitcoin Exchange Reserve Starts Moving Sideways As Inflow And Outflows Attain Equilibrium

As per the latest weekly report from Glassnode, the percentage of the total BTC supply on exchanges looks to have ended its decline recently and is now moving sideways.

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

When the value of this metric rises, it means exchanges are observing net inflows right now. Such a trend can be bearish for the price of the coin as it represents an increase in the sell supply of the crypto.

On the other hand, when the reserve’s value decreases, it implies outflows are overwhelming the inflows at the moment. This trend may turn out to be bullish for the value of Bitcoin as it may be a sign of accumulation from holders.

Related Reading | Risk Aversion Pulls Crypto Market Down, Bitcoin Still Below $40K

Now, here is a chart that shows how the percentage of the total supply that the exchange reserve accounts for has changed over the past couple of years:

Bitcoin Exchange Reserve

Looks like the value of the indicator seems to have moved sideways recently | Source: Glassnode's The Week Onchain - Week 10, 2022

As you can see in the above graph, the metric had an all-time high back in March 2020, following which the percentage of the Bitcoin supply on exchanges went on a constant decline until May 2021, where there was a brief increase due to the selloff that month.

Soon after, the indicator did resume the downtrend, but following September 2021 the metric has mostly consolidated sideways.

Related Reading | Goodbye, Russia – A Number Of Goldman Sachs Employees Are Leaving Russia To UAE

This means that at the current value of the exchange reserve, an equilibrium between the inflows and the outflows has been established.

The sideways trend is interesting since while the price of Bitcoin has struggled recently and macro uncertainties like the Russian-Ukraine war are looming over the market, there has been no significant increase in the indicator.

Usually, a large selloff occurs during periods as now, but as the metric still continues to go sideways, it means there has still been enough demand (that is, outflows) to counteract any inflows. This trend may be bullish for the price of Bitcoin.

BTC Price

At the time of writing, Bitcoin’s price floats around $38.7k, down 13% in the past week.

Bitcoin Price Chart

BTC's price seems to have shown lesser volatility since the plunge a few days back | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, Glassnode.com
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Keshav Verma
Keshav Verma

Keshav Verma

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

Read more

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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Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality
Created by industry experts and meticulously reviewed
The highest standards in reporting and publishing
How Our News is Made

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Ad discliamer

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