Bitcoin reserves on cryptocurrency exchanges have hit their lowest level since CryptoQuant began monitoring it in October 2021.
According to recent data, users have withdrawn over 51,000 Bitcoins from major exchanges in the past month. This has reduced the available liquid supply and indicates that investors are moving their assets into long-term storage wallets.
This movement of Bitcoins out of exchanges and into cold storage wallets has been going on for several years. It is possibly related to the increase in the price of BTC and to factors such as the approval of spot Bitcoin ETFs and the anticipation surrounding the next cryptocurrency halving event.
As of October 2021, Bitcoin reserves on exchanges were around 3.2 million units, which represents a drop of approximately 590,000 coins since then.
According to Julio Moreno, head of research at CryptoQuant, the decline in Bitcoin reserves on exchanges this year is partly related to Mt. Gox distributing assets to its creditors, as well as Coinbase's reduced reserves.
“Coinbase reserves are being held in specific wallets, possibly those of large institutional investors, which reduces the selling pressure on Bitcoin,” Moreno explained in an interview with The Block.
Bitcoin reserves on exchanges plummet
Moreno also highlighted that, when excluding data from Mt. Gox and Coinbase, overall exchange reserve levels for 2024 appear more stable, suggesting that the current drop is concentrated primarily in these two sources. The decline in reserves coincides with an increase in Bitcoin accumulation by new institutional participants.
Data from CryptoQuant shows that institutional wallets, which exclude miners and exchanges, have increased their Bitcoin accumulation over the past 30 days.
“The buying pressure from these new accumulations is unprecedented. New whales are pushing Bitcoin prices higher by buying more. Currently, these new whales hold around 1.97 million Bitcoins,” CryptoQuant community analyst JA Maartunn told The Block.
Maartunn noted that these acquisitions are not limited to spot Bitcoin ETFs, but also involve other large investors.
CryptoQuant highlighted that a dynamic is occurring where large investors continue to accumulate coins, while small investors are reducing their positions. According to CryptoQuant analysts, this trend could drain the selling power of retail trading, which could subsequently try to buy back Bitcoins at higher prices when market sentiment becomes more optimistic.
“On the other hand, large institutional investors have been building their positions ahead of this improvement in sentiment, which will allow them to allocate their coins on upcoming price increases,” the analysts added.
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