Despite Struggling Price, Bitcoin Exchange Reserve Hits Lowest Value Since Sept 2018

Keshav Verma

1 year ago

3 mins read

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Despite the recent struggling Bitcoin price, on-chain data shows the exchange reserve has just hit the lowest value since September 2018.

Bitcoin Exchange Reserve Declines To Lows Not Seen Since Sept 2018

As pointed out by an analyst in a CryptoQuant post, the BTC exchange reserve has observed further decline recently, reaching the lowest values in more than 3.5 years.

The “all exchanges reserve” is an indicator that measures the total amount of Bitcoin present on wallets of all exchanges.

When the value of this indicator goes up, it means the supply on exchanges is rising as investors deposit their coins. Such a trend is usually bearish for the price of the crypto as holders usually transfer to exchanges for selling purposes.

On the other hand, the reserve’s value decreasing would imply that investors have been withdrawing a net amount of Bitcoin recently. This trend can prove to be bullish for the coin as it may be an indication of accumulation behavior.

Now, here is a chart that shows the trend in the price of BTC over the past four years:

The value of the indicator seems to have decreased over the past couple of years | Source: CryptoQuant

As you can see in the above graph, the Bitcoin exchange reserve has been on a downtrend since the last two years.

The metric did observe a temporary upwards trajectory during May 2021, but after a few months of sideways movement the reserve resumed its decline. Now, the indicator has hit its lowest value since September of 2018.

The exchange reserve is often considered the “selling supply” of the crypto. With its value going down for such a large timespan now, some analysts believe it may be creating a supply shock in the Bitcoin market.

Due to supply-demand dynamics, such a supply shock would be quite bullish for the price of the crypto in the long term.

However, others think the lowering reserves are simply because of the market structure being redistributed, and that exchanges aren’t the only major source of selling pressure today.

Nonetheless, the reserve still trending down despite the recent struggling Bitcoin price amid uncertainty due to the Russia-Ukraine war can be a positive sign of conviction among holders.

BTC Price

At the time of writing, Bitcoin’s price floats around $38.3k, up 1% in the last week. Over the past month, the crypto has gained 3% in value.

The below chart shows the trend in the price of BTC over the last five days.

Looks like Bitcoin has moved sideways in the last few 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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