The on-chain data suggests that Bitcoin’s reserves are in sharp decline, suggesting a potential return to the bullish trend.
Bitcoin Exchange Reserves Historic Data Could Tell You Current Trend Is Bullish
According to a CryptoQuant analyst, Bitcoin’s exchange reserves have fallen sharply in the last few weeks.
The “all exchanges reserve” is a BTC indicator that shows the total amount of coins currently stored in exchange wallets.
This indicator rises means that investors deposit their Bitcoin to the exchanges. The majority of holders send their bitcoins to exchanges for withdrawals or to buy altcoins. This trend could be bearish on the crypto’s price.
However, if the reserve falls, this could mean that holders are withdrawing coins right now. This trend can be bullish for Bitcoin if it continues as it may indicate investors are still in an accumulation phase.
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Here’s a chart showing the change in Bitcoin reserve value over the last six months.
BTC Exchange Reserves seem to have fallen since a while | Source: CryptoQuant
Since May, the Bitcoin reserve trended down. This would indicate that the cryptocurrency market is currently adding it.
As you can see in the above graph, the analyst has highlighted the two types of trend the different parts of the indicator’s curve have seemed to follow during this period.
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The gradual fall in reserve seems to have marked the peak formation of coin prices. However, a sudden drop may indicate an upward trend.
The current trend is clearly one of sharp drops, so quants believe that Bitcoin will be bullish in the weeks ahead.
At the time of writing, Bitcoin’s price floats around $46k, down 4% in the last seven days. In the past month, Bitcoin’s price has fallen 21%.
Below is a chart showing the change in BTC’s price over the past five days.
Source: BTCUSD on TradingView| Source: BTCUSD on TradingView
Bitcoin is currently in consolidation as its price stagnates between $45k- $50k. Currently, it’s unclear when the coin might break out of this sideways movement, but if the exchange reserves are anything to go by, the long-term outlook might be bullish for BTC.
Unsplash.com featured image, Charts from TradingView.com and CryptoQuant.com charts