Bitcoin Exchange Reserves Lowest In 3 Years, What Does It Mean For The Price?

Keshav Verma

Last Updated: June 11, 2024 1:58 pm

3 mins read

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On-chain data shows Bitcoin exchange reserves have hit the lowest value in 3 years, here’s what it might mean for BTC’s price.

Bitcoin Exchange Reserves Lowest In 3 Years As Negative Netflows Continue

As pointed out by a CryptoQuant post, exchange reserves have been continuing their downtrend, and have now reached lows not seen since 3 years ago.

The all exchanges reserve is an indicator that shows the total amount of Bitcoin held in wallets of all centralized exchanges.

An increase in the metric’s value suggests more investors are depositing their coins for withdrawing to fiat or altcoin purchasing. On the other hand, a decrease means more buyers are moving their BTC to personal wallets for hodling or OTC deals.

Here is the latest chart for the Bitcoin all exchanges reserve:

The BTC all exchanges reserve plunges down

As the above graph shows, the value of the indicator has sharply gone down recently. The current level of the metric is the lowest it has been in the last three years.

As already mentioned before, a downtrend like this one means investors are withdrawing their coins from exchanges possibly to hodl or sell through OTC deals.

Such values are typically bullish in the long-term as they may mean that there are more long-term holders in the market who are hodling out of exchanges.

There is another relevant indicator here, called the Bitcoin netflow, which shows the net amount of BTC entering or exiting exchanges.

A positive spike in the chart for the exchange netflows means exchanges are observing more inflows compared to the outflows. A negative value implies just the opposite.

Big spikes or a prolonged period of smaller spikes in one direction can affect the value of the exchange reserves. Naturally, positive values can increase the reserve while negative ones can decrease it.

The below chart shows the current trend for the exchange netflows:

The BTC netflows show big negative spikes

As expected, the netflows have been negative recently, leading to the low values of the Bitcoin exchange reserves.

What Could It Mean for BTC’s Price?

As mentioned earlier, a downtrend in the exchange reserves can be bullish for the price in the long-term as it may imply a greater amount of long-term holdings. This has also been usually true historically, but there can be certain exceptions.

However, looking at the current Bitcoin price movement, it looks like selling has been going on. But as the exchange reserves haven’t shot up (unlike the crash from the May ATH), sales are being done likely through OTC deals.

Now, depending on if most of the outflows are being done to sell through OTC deals, a bearish picture can be there instead.

BTC's price continues to decline | Source: BTCUSD on TradingView

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

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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