The percentage of Bitcoin supply on exchanges has fallen further to 12% recently, as the supply shock continues to worsen.
Only 12% of Bitcoin supply is now held by exchanges
As one analyst pointed out in an article on CryptoQuant, the percentage of BTC supply stored on exchanges has now fallen to just 12%.
The Reserve of All Exchanges is an on-chain indicator that measures the total amount of Bitcoin currently held by the wallets of all exchanges.
The “percentage of BTC supply on exchanges” is a metric that tells us the ratio of the exchange reserve to the total supply of the crypto.
When the value of this indicator increases, it means that the exchange wallets receive a net amount of coins. As investors typically send their coins to exchanges for sale, this offer is often referred to as a market sell offer. Therefore, an uptrend can be bearish for the crypto price.
On the other hand, when the value of the metric decreases, it means that holders are withdrawing their Bitcoin from exchanges. Such a prolonged trend may imply that there is ongoing accumulation in the market and the available supply is decreasing. Therefore, the downward movement of the indicator may be bullish for BTC.
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Now, here is a graph that shows the trend of the value of this metric over the past few years:
Looks like the supply on exchanges has been heading down since a while now | Source: CryptoQuant
As you can see in the chart above, Bitcoin’s supply percentage on exchanges has dropped to just 12% now.
The indicator’s last all-time high (ATH) was reached at around 16%. Since then, the metric has steadily declined and has now fallen 4% in value.
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Some traders believe that this decrease in supply on exchanges could create a supply shock in the market. Such a scenario would be bullish for Bitcoin price in the long run.
However, some recent data contradicts the narrative, claiming that supply has simply redistributed in the form of investment vehicles like ETFs.
As of this writing, the price of Bitcoin is hovering around $42.7,000, up 3% in the past seven days. Over the past month, the crypto has lost 11% in value.
The chart below shows the price trend of the coin over the past five days.
BTC's price has once again started to move sideways in the $40k to $45k range over the last few days | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com