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Bitcoin (BTC) exchange reserves have nearly fallen to 2016 levels, which could signal a bull market.
According to CryptoQuant, the Bitcoin reserves on crypto exchanges reached their all-time high (ATH) for 2024 on January 31st at $3.06 million. However, that number then began to fall.
As of September 15th, the reserve had dropped to $2.6 million. This marks an all-time low (ATL) for BTC reserves in 2024.
Historically, the price of Bitcoin and its reserves on exchanges followed each other. When the price went up, reserves also increased. However, this trend broke in March 2024.
Why Is the Bitcoin Exchange Reserve Declining?
The decreasing Bitcoin exchange reserve suggests that traders transfer less BTC to crypto exchanges. One reason could be that many prefer cold wallets, which offer more security.
If the main reason is the preference for cold wallets, it could indicate that traders intend to hold the coin for the long term, keeping it as far away from exchanges as possible.
Typically, a drop in Bitcoin exchange reserve is seen as a bullish signal, as traders are likely holding onto their assets. In contrast, if this number rises sharply, it could signal a bear market, as traders may be more willing to sell BTC rather than hold.
Whales Continue To Buy Bitcoin
The DeFi Investor pointed out in a post on X (formerly Twitter) that Bitcoin reserves are nearing 2016 lows, possibly signaling that sellers are exiting the market.
The no. of people sending their BTC to exchanges just hit a 8-year low.
Sellers are starting to run out of coins. pic.twitter.com/MtWWcqNZ0P
— The DeFi Investor 🔎 (@TheDeFinvestor) September 16, 2024
According to CryptoQuant, the whale ratio of Bitcoin on crypto exchanges has been rising since the beginning of 2024. This year, the whale ratio hit its highest level in the last three years.
The whale ratio rose to 0.9 on July 24th, compared to 0.4 on December 31st, 2023.
