Bitcoin Bullish Signal: Exchange Reserves Hit New 4-Year Lows

Keshav Verma

1 year ago

3 mins read

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On-chain data shows Bitcoin exchange reserves have now reached new 4-year lows, a sign that could prove to be bullish for the crypto’s price.

Bitcoin Exchange Reserve Has Sunk Down Further Recently

As pointed out by an analyst in a CryptoQuant post, the BTC exchange reserve has been going down, suggesting buying has been going in the market.

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

When the value of this metric goes up, it means investors are depositing a net amount of coins to exchanges right now.

Such a trend, when prolonged, can be bearish for the price of the crypto as holders usually transfer their crypto to exchanges for selling purposes.

On the other hand, a downtrend in the reserve suggests investors are withdrawing their BTC from exchanges at the moment. This kind of trend can be bullish for the price of the crypto.

Now, here is a chart that shows the trend in the Bitcoin exchange reserve over the last few years:

The value of the metric seems to have experienced downwards movement over the last year | Source: CryptoQuant

As you can see in the above graph, the Bitcoin exchange reserve has observed some sharp movement down recently, taking its value to new 4-year lows.

This is a continuation of the overall downtrend in the indicator that has been going on for almost a full 12 months now.

This may imply that the market has been in a state of constant accumulation, which would mean a supply shock could be deepening in the BTC market.

Due to supply-demand dynamics, such a shock can be constructive for the price of the cryptocurrency in the long term.

However, some data from December 2021 suggests that the growth of new investment instruments like ETFs are likely one of the reasons behind the exchange reserve’s decline.

The coins are simply moving from one source of selling pressure into another. Such a shift would mean that a supply shock wouldn’t take place just by declining exchange reserves.

Nonetheless, some of the decline should still be from buying in the market so a decreasing reserve can still be bullish for the value of Bitcoin.

BTC Price

At the time of writing, Bitcoin’s price floats around $30.1k, up 1% in the past week. Over the last month, the crypto has lost 12% in value.

Looks like the value of the crypto has moved sideways over the past 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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