On-chain data shows the Bitcoin exchange reserve has taken a further beating this March, and has now reached the lowest value since August 2018.
Bitcoin Exchange Reserve Loses 96k BTC Over The Past Month
As per the latest weekly report from Glassnode, the BTC exchange reserve lost around 96k BTC over the course of March.
The “balance on exchanges” is an indicator that measures the total amount of Bitcoin stored in wallets of all exchanges.
When the value of this indicator goes up, it means investors are depositing a net amount of coins right now. Such a trend may be bearish for the price of the crypto as holders usually transfer their crypto to exchanges for selling purposes.
On the other hand, a downtrend in the reserve indicates that a net amount of coins is leaving exchanges at the moment. Naturally, this kind of trend can be bullish for the price as it may imply investors are in a phase of accumulation currently.
Now, here is a chart that shows the trend in the Bitcoin exchange reserve over the past few years:
Looks like the value of the metric has observed decline recently | Source: Glassnode's The Week Onchain - Week 14, 2022
As you can see in the above graph, the Bitcoin exchange reserve had been moving mostly sideways since September of last year.
However, last month finally the indicator seems to have broken out of consolidation, and now looks to be heading downwards again.
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The current balance on exchanges amounts to around 2.47 million BTC, having observed a deduction of about 96k BTC over the past month. This value of the reserve is now the lowest it has been since August 2018.
Both the Bitcoin rallies that took the price to new all-time highs in 2021 were preceded by a downtrend in the indicator.
As the metric has now broken out of sideways movement and looks to be continuing a similar downtrend again, the price may also observe a similar effect as during those previous instances.
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However, it’s not a certainty as any wave of selling can quickly take the exchange reserve back to a higher level, erasing this drop.
BTC Price
At the time of writing, Bitcoin’s price floats around $46.8k, down 2% in the last seven days. Over the past month, the crypto has gained 19% in value.
The below chart shows the trend in the price of the coin over the last five days.
Looks like the price of BTC has been mostly consolidating sideways over the last few days | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, Glassnode.com