Bitcoin Exchange Reserves: Is the 10-Year Trend Shifting?

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• A 10-year historical trend for Bitcoin (BTC) exchange reserves has shifted. Over the last three years, investors have shown a tendency to withdraw more Bitcoin from crypto exchanges.
• As of the time of writing, there are approximately 2.04 million BTC in exchange reserves. This figure still represents more than 10% of Bitcoin’s current circulating supply.
• Interestingly, the lower the amount of Bitcoin held in exchange reserves, the lower the demand needed to trigger a bull market, as it was two years ago.

Bitcoin’s central exchange reserves have been decreasing for 3 years: What does the decline in this metric mean? Historical comparison!

Bitcoin Exchange Reserves Keep Decreasing

A 10-year historical trend has changed for Bitcoin (BTC) exchange reserves. Over the last three years, investors have shown a tendency to withdraw more Bitcoin from crypto exchanges. Understanding that BTC deposited to an exchange can become selling pressure at any moment is important. This speculative supply poses a near-term selling threat that can neutralize future speculative demand, negatively affecting Bitcoin’s price movement.

Moreover, depositing funds into an exchange is often interpreted as an intention to sell. On the other hand, withdrawing funds to a personal storage Bitcoin wallet indicates the opposite intention: the intention to “HODL.”

Significantly, from 2013 to 2020, Bitcoin exchange reserves consistently increased, with investors and miners depositing their BTC increasingly on exchanges for trading or selling.

As of the time of writing, there are approximately 2.04 million BTC (73.3 billion dollars) in exchange reserves. This figure still represents more than 10% of Bitcoin’s current circulating supply, which is a heavily weighted speculative supply. However, this also means that Bitcoin exchange reserves have decreased by about 32% from the peaks of around 3 million BTC held by exchanges in 2020.

Despite high supply, BTC reached a record in 2021

Despite historically having one of the highest speculative supply amounts, BTC managed to reach an all-time high price in 2021 due to significantly higher speculative demand for the leading cryptocurrency.

Interestingly, the lower the amount of Bitcoin held in exchange reserves, the lower the demand needed to trigger a bull market, similar to two years ago. Additionally, this also signifies reduced risk exposure for storage disasters, like those seen in 2022, for platforms such as FTX.