The total number of Bitcoins on exchanges is starting to decline more sharply after gradually declining since the start of 2021, according to data from data analytics website Glassnode.
How much Bitcoin is held on exchanges can give us a lot of information about the current state of the market, as well as provide insight into what Bitcoin investors are thinking. If Bitcoin leaves exchanges, it tends to imply that investors are holding their assets for the long term instead of looking to trade for short-term profits.
“The data clearly shows that an asset is in high demand and one seems to be trusted by traders, which further implies that resale of newly purchased BTC will not be in the short term,” Jason Deane said BTC analyst at market analysis firm Quantum Economics.
Between February 23 and March 2, the amount of BTC on the exchange decreased by 2 percent, corresponding to 52,900 Bitcoin ($ 2.7 billion) being removed from the exchanges. This continues its downward trend over the past year as more Bitcoin is still being withdrawn from exchanges for long-term storage.
There are currently 2.3 million Bitcoins left on exchanges, the lowest level since July 2018, when BTC was worth around $ 7,400.
“The continued removal of Bitcoin from exchanges seems to indicate that‘ buy and hold ’is a common sentiment among investors,” added Deane.
This downtrend is going against history. During most of BTC’s existence, the total amount held on exchanges increased. According to Glassnode data, Bitcoin held on exchanges typically rose from August 2014 to March 2020.
But in March 2020, this historical trend changed and BTC has largely left the exchange since. Part of this could be attributed to Bitcoin’s growing popularity following the COVID-19 epidemic. At the same time, over the past 12 months, giant organizations like MicroStrategy, Square and Tesla have bought large amounts of Bitcoin for offline storage, exaggerating the trend.