With a recent flight of Bitcoin (BTC) and Ethereum (ETH) from centralised exchanges, retail investors in the cryptocurrency field are displaying traits of long-term believers. With analysts reading the declining user balances for both big cryptocurrencies as a positive indication for the future, latest statistics indicates four-year lows.
As investors waited for higher prices in a bull market, user balances of Bitcoin (BTC) and Ethereum (ETH) on centralized exchanges significantly dropped, according to Glassnode data.
The value of Bitcoin fell to fewer than 2.3 million coins, or roughly $158 billion, while the value of Ethereum fell to less than 16 million coins, or less than $58 billion.
‘Diamond Hands’ And Dollar-Cost Averaging
Starting before the July 2020 bull run, the fall in exchange balances has persisted unabatedly. This points to a change in investor perspective as consumers choose to hang onto their coins for the long run instead of active trading them.
Source: Glassnode
There were various reasons why one could get this fresh confidence. Rising inflation and other financial tragedies combined with the economic upheaval brought on by recent market upheavals make alternative assets like Bitcoin, with its limited supply, progressively appealing as a hedge.
Related Reading: Crypto Heist Heats Up: Orbit Chain Hackers On The Move With $48 Million
Some analysts have noticed a new type of crypto investor. Instead of going after quick gains, these investors are now holding onto their coins through market highs and lows, adopting a “diamond hands” approach. Many are also using dollar-cost averaging, steadily buying more to build their positions over time.
Total crypto market cap at $2.3 trillion on the daily chart: TradingView.com
Wall Street Whales Dive In, DeFi Heats Up Ethereum’s Engine
The good energy goes beyond those of regular investors. By introducing spot Bitcoin ETFs, institutional behemoths like BlackRock and Fidelity have been increasing demand for Bitcoin. Well-known companies like MicroStrategy have also made big investments in the top cryptocurrency.
For Ethereum (ETH), the world’s second-largest crypto and the king of altcoins, the bullish narrative is fueled by a different set of factors. Ethereum’s dominance in the Decentralized Finance (DeFi) space, where it underpins a $68-billion ecosystem, positions it as a major player in the future of finance.
Bitcoin and Ethereum price action and market cap. Source: Coingecko
Long-Term Value Proposition
With over 25% of Ethereum’s supply currently staked, it’s clear that investors see long-term value in the platform, market observers noted. The combination of a thriving DeFi ecosystem, the staking option, and the upcoming complete switch to proof-of-stake paints a very optimistic picture for Ethereum’s future.
With investors opting to move their crypto off the trading floor and into the deep freeze, the recent decline in exchange balances reflects a rising confidence in the long-term potential of these digital assets.
Featured image from The Science of Birds, chart from TradingView
