On-chain data shows that Bitcoin exchange reserves were at an 8-year low last month despite the rebound in the asset.
Bitcoin supply on exchanges has been flat recently
As on-chain analytics firm Santiment explained in an X post, Bitcoin and Ethereum differed in the direction of supply on exchanges. This indicator, as its name suggests, measures the total amount of a particular asset currently stored in wallets linked to centralized exchanges.
When the value of the metric rises, it means that investors are depositing a net number of tokens to these platforms. Since one of the main reasons holders turn to exchanges is for selling purposes, this type of trend can have a downward impact on the price of the cryptocurrency.
On the other hand, a declining index indicates that outward exchange flows outweigh inflows. This trend means that investors may engage in accumulation, which could of course be a bullish signal.
Now, here is the chart shared by Santiment that shows the trend in the supply of Bitcoin and Ethereum exchanges over the past year:
Looks like the value of the metric has gone up for ETH in recent days | Source: Santiment on X
As shown in the chart above, Bitcoin supply on exchanges noticed some decline during March, and since then has followed a mostly flat path. Currently, about 5.6% of Bitcoin supply resides within wallets connected to the exchange. “It has remained stable around this level over the past month, which is the lowest percentage of Bitcoin supply on exchanges since 2018,” the analytics company noted.
While Bitcoin has seen its exchange supply remain steady at 8-year lows recently, the trend has been a bit different for Ethereum. From the chart, it’s clear that ETH saw a more dramatic decline in supply on exchanges than BTC over most of the last year, but more recently, the tide has reversed for the network.
Over the past 10 days, Ethereum has seen the index rise from 4.2% to 4.6%, which is a notable increase. “However, this is also still near the lowest levels we have seen since public trading of ETH began in 2015,” Santiment explained.
Interestingly, Bitcoin’s net fixed exchange inflow arrived while Bitcoin observed a recovery surge. This means that despite the opportunity to make profits, stockholders have not made deposits for the sale.
What should be noted when it comes to supply on exchanges is that while exchanges played a central role in the digital asset sector earlier, the model has recently changed as a result of the emergence of off-chain investment methods such as spot exchange-traded funds (ETFs). As such, exchange reserves alone can no longer capture the full picture of the market.
Bitcoin price
At the time of writing, Bitcoin is trading around $79,400, down 0.9% in the past seven days.
The trend in the price of the coin over the last five days | Source: BTCUSDT on TradingView
Featured image by Dall-E, chart from TradingView.com
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