Bitcoin Held On Crypto Exchanges Hits ‘Multi-Year Lows’: Report

In short

  • Bitcoin exits exchanges.
  • It is increasingly held by “hoarding addresses”.
  • These addresses are buying but not selling, reducing supply and creating upward pressure on prices.

Something interesting happened after the global COVID-19 pandemic began in March 2020. Okay, okay, a lot of interesting (and horrible) things happened. But one of them was the shift from crypto exchanges experiencing net inflows of Bitcoin almost every month to constantly monitoring the amount of BTC in ever-smaller exchange accounts.

With net Bitcoin outflows averaging 96,200 coins per month over the past two years, exchanges’ cumulative Bitcoin balances have hit “multi-year lows,” according to a report by crypto analytics firm Glassnode. Specifically, they fell to their lowest level since August 2018.

The bulk of recent outflows have come from a handful of the usual suspects: Binance, Bitstamp, Bittrex, Coinbase, Gemini, and Kraken. (However, in the case of Binance and Gemini, despite their recent downward trends, their holding balances have increased significantly over the past two years, mostly at the expense of Coinbase.)

The upshot of all this, says Glassnode, is that more and more Bitcoin is moving away from exchanges and into addresses that periodically buy Bitcoin but don’t spend it — in other words, HODLers. These “accumulation addresses” can belong to individuals but also to companies and agents. The Luna Foundation Guard, which has gobbled up $1.4 billion in BTC to support its algorithmic stablecoin, falls into this category, as does Subsidiary of MicroStrategy MacroStrategy.

However, the category does not include all Bitcoin whales. The so-called prawns, which have balances below 1 BTC, have also absorbed more than their share of coins in circulation since late January.

Per Glassnode, since the first week of December, balances at these accumulation addresses — both whales and shrimp and everyone in between — have increased by 217,000 BTC (nearly $10 billion). The price was then nestled between $49,000 and $50,000, while it currently sits just below $46,000.

Bitcoin held on exchanges. Image: Glassnode

Although the increase in HODLing is expected to put upward pressure on the price, the price has been declining over this period. It’s best not to read too much into it, because net outflows and accumulation are just two of many data points (including the amount of money people feel confident investing in a context increase in interest rates and consumer prices), and the price situation may change considerably due to slight lags in the comparison dates.

Still, Glassnode points out that the amount of Bitcoin accumulated each day is far greater than the amount of new BTC created. As such, he says, “the scarcity and pristine nature of Bitcoin as collateral may well come to the fore once again.”

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Bitcoin Held On Crypto Exchanges Hits ‘Multi-Year Lows’: Report


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