According to data from the Bitcoin Exchange Reserve, the Bitcoin price has dropped another 50k BTC during the week. That could signal that it is bullish.
Bitcoin Exchange Reserve continues to observe further decline in recent weeks
In a CryptoQuant blog post, an analyst noted that over the past week 50k BTC net outflows have exited exchange wallets.
The “all exchanges reserve” is an indicator that measures the total amount of Bitcoin stored in wallets of all centralized exchanges.
This metric is worth more than it costs. Investors deposit more coins, which means that the demand on the exchanges rises. This trend could be negative for the value of the coin, as owners usually sell their coins on exchanges.
On the other hand, the reserve’s value decreasing implies that a net amount of Bitcoin is exiting exchange wallets at the moment. This kind of trend when sustained over a period can prove to be bullish for the coin’s price as it may be a sign that investors are accumulating.
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Below is a chart which shows how the BTC reserve has changed over the past months.
The indicator seems to have seen a sharp decline in value recently. Source: CryptoQuant| Source: CryptoQuant
You can see that Bitcoin’s exchange reserve has fallen over the months, as you can see from the graph. The metric’s value has fallen 50k BTC over the last week. The last few days saw significant drops of around 10k-11k BTC.
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The exchange reserve has traditionally been considered the “selling supply” of the coin. It has been declining for quite some time, so the supply-demand dynamics should positively impact the price.
Some have referred to this decline as creating a “supply shock” in the market. New data indicates that the reserve may not be the sole source of selling power. Coins leaving exchanges have been redirected into ETFs, instead.
However, the declining reserve does decrease part of the selling supply. This trend could still have a bullish effect.
BTC Prices
At the time of writing, Bitcoin’s price floats around $41k, up 5% in the past week. The crypto’s value has fallen 6% over the past month.
Below you will see the five-day trend of the cryptocurrency’s price.
Bitcoin's price seems to have risen in the past few days. Source: TradingView.| Source: BTCUSD on TradingView
Unsplash.com's featured image. Charts by TradingView.com. CryptoQuant.com chart.