As the price of Bitcoin (BTC) fell below U.S. $12,000, some investors began to worry that there would be another drop in the crypto market like the one that occurred on March 11.
However, data from CryptoQuant, an on-chain analysis company, suggests otherwise, as Bitcoin reserves on the exchanges reached a low of 2020. CryptoQuant CEO Ki Young Ju said:
„People still worry about the big mass sale like March, but the exchanges don’t have as many unused Bitcoins (waiting to be sold) as that day“.
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All Exchanges Reserve and MPI charts
The Bitcoin Exchange Booking Metric shows how much BTC is held in the exchanges. When the figure reaches a minimum, it suggests that investors have withdrawn their holdings from the exchanges to more secure and permanent storage.
Chainalysis data also shows that the amount of BTC held for 52 weeks is increasing. In addition, Glassnode, a provider of chain analysis, recently observed similar behavior and said that „the decline in Bitcoin balances on the exchanges indicated a reduction in selling pressure.
At the time of writing, 2.6 million BTCs are held at the exchanges, which is less than the amount held before the March mass sale, when the figure was 2.9 million BTCs.
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The miners aren’t selling
CryptoQuant data also revealed that the miners are choosing to keep their current supply of BTC.
This suggests that the miners expect higher prices and is a good indication of positive sentiment, as the miners constitute a significant part of the sales pressure for Bitcoin, they have some influence on the price of Bitcoin.
Bitcoin’s hash rate has also risen, another bullish signal as more people see BTC’s price as reliable above its production price, a factor that gives the hash rate and price a strong correlation.
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Although the number of BTCs held by the exchanges is minimal in 2020, CryptoQuant data also shows that this figure may soon change as Bitcoin entries to the exchanges increase.
According to Ki Young Ju, the increasing amounts of BTCs being sent to the exchanges are often a downward signal.
„BTC entries (netflows) at the spot exchanges could indicate possible selling pressure, stable currency entries indicate possible buying pressure.
While the increase in exchange entries for Bitcoin is often bad news, USDT transfers are also increasing, according to Glassnode data, having peaked in 2020 on August 17.