Bitcoin exchange reserves recently showed an abrupt spike despite having been in decline for many months.
Bitcoin Exchange Reserves Rise After Months of Downtrend
CryptoQuant posted that on-chain data showed that BTC’s exchange reserves had risen significantly in the last few weeks.
The “all exchanges reserve” is an indicator that measures the total amount of Bitcoin stored in wallets of all exchanges at a particular point in time.
Investors may withdraw their BTC from exchanges if the currency’s value falls. To accumulate their BTC, holders may withdraw it to buy more. The trend may be positive for crypto.
However, an indicator that increases in value could mean holders are sending their Bitcoins on exchanges. These transfers may occur to withdraw to fiat money or buy altcoins. This trend could be bearish.
Similar Reading: Bitcoin Open Interest Remains High Post Dramatic Dip| Bitcoin Open Interest Remains Elevated Post Dramatic Dip
Here’s a chart showing the change in BTC currency reserves over the last few months.
Source: CryptoQuant| Source: CryptoQuant
You can see that the Bitcoin currency reserves have been decreasing for quite some time. However, in the past couple of days, the indicator’s value has shown a sudden increase.
The increase in reserve is approximately 39k BTC, which was deposited on exchanges yesterday and today.
Related reading: The Bitcoin Saga – A look at BTC’s history of up’s and down’s| The Bitcoin Saga: A Look At BTC’s History Of Up’s And Down’s
This is often a sign of whale activity. The price of Bitcoin has struggled recently so it’s possible some institutional investors could be preparing to pull out from the market.
If it’s indeed a sign of whale dumping, then the outlook of the crypto’s price could be bearish at least in the near future.
At the time of writing, Bitcoin’s price floats around $56.4k, down 2% in the last seven days. In the past month, crypto lost 8.8%.
The chart below shows how the currency’s price has changed over the course of five days.
BTC has seen a consolidation in its price over the last few days. Source: BTCUSD tradingview| Source: BTCUSD on TradingView
Bitcoin crashed over a week ago due to fud from Omicron COVID. The coin’s price dropped to as low as $53k, but a few days ago the coin recovered its losses.
Since then the trend has been sideways for crypto. It’s unclear at the moment which direction the coin might break out of this consolidation, but if the exchange reserve is anything to go by, BTC might face bearish trend soon.
Unsplash.com featured image, Charts from TradingView.com and CryptoQuant.com charts