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Home Cryptocurrency news Bitcoin

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

Tony Spilotro by Tony Spilotro
6 months ago
in Bitcoin, Blockchain, Cryptocurrency news, Technical analysis
Reading Time: 3min read
bitcoin btcusd

Warning sign - possible fall from the mountain cliff, Julian Alps in the background

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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.

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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.

Related Reading | “Intense” Bitcoin Whale Exchange Flow Could Be Behind Weekend Crash

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?

bitcoin btcusd november 2018

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 bitcoin exchange november 2018

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.

Related Reading | Beware: Bitcoin Price Action Mimics Market Maker Model

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
Tags: bitcoinbtcbtcusdbtcusdcBTCUSDTcryptoxbtxbtusd
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a digital media executive and global remote work leader with a decade of content experience and excellent. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter and feel free to drop me a line if you would like to work together.

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