The Bitcoin market appears to have taken an intriguing turn as reserves of assets on centralized exchanges have reached their lowest levels since November 2018.
This development, marked by a CryptoQuant analyst known as G aah, points to a notable change in BTC investor behavior within the crypto space and also suggests quite an interesting trend for Bitcoin.
Bitcoin reserves on exchanges hit five-year lows
According to the analyst, Bitcoin reserves on exchanges will decline significantly by 2024, reflecting a shift towards long-term investment strategies among market participants.
This trend indicates that investors are increasingly transferring their assets to private wallets, shrinking the supply available for immediate sale and increasing buying pressure in an already supply-constrained market.
According to G aah, this behavior signals a broader sentiment shift, with market participants showing greater confidence in Bitcoin as a store of value amid “economic uncertainty and rising inflation.”
By removing Bitcoin from exchanges, investors reduce the chance of a sudden sell-off, which could lead to greater price stability. However, the reduced supply on the exchanges can also lead to increased volatility, especially if demand continues to grow or remains consistent.
The CryptoQuant analyst noted:
That said, this scenario points to a potentially more volatile but resilient Bitcoin market, with less selling pressure and growing dominance of long-term holders, which could open up room for new price spikes.
BTC’s upward momentum is cooling
After hitting an all-time high (ATH) of $93,477 on Wednesday, November 13, BTC has suffered quite a noticeable correction, now down 4% from this peak. So far, the asset has failed to continue its upward momentum and looks set to see more sell-offs.
Currently, Bitcoin is trading below $90,000, with a current trading price of $89,779, down 1.4% in the past day. This price drop resulted in approximately $49 billion being deducted from the market cap valuation on Wednesday.
For context, as of today, BTC’s market cap is $1.775 trillion, down nearly 5% from its $1.835 trillion valuation two days ago. Bitcoin’s daily trading volume fell from over $100 billion earlier this week to less than $85 billion.
In addition to the impact on market capitalization and trading volume, BTC’s decline has also significantly affected a handful of traders. According to facts from Coinglass, approximately 170,215 traders were liquidated in the last 24 hours alone, bringing the total number of liquidations in the crypto market to $510.13 million.
Of these total liquidations, Bitcoin accounts for $132.43 million, with the majority of liquidations coming from long positions – those that bet that the upward momentum would continue.
Featured image created with DALL-E, Chart from TradingView
