As analysts pointed out the trend of shortage of sellers, Bitcoin’s (BTC) foreign exchange reserves continued to decline. Since the collapse in March, the exchange’s foreign exchange reserves have quickly dropped from 2,950,000 BTC to 2,700,000 BTC.
In just seven months, foreign exchange reserves fell by 250,000 BTC, which meant a drop of 2.85 billion US dollars. There may be two main factors behind the steep trend: fewer sellers and lower trust in exchanges.
Bitcoin reserves on the exchange. Source: Glassnode
Has the number of Bitcoin sellers in the accumulation phase declined?
Analysts mainly attribute the continued decline in Bitcoin foreign exchange reserves to the overall shortage of sellers in the market.
Since retailers are not selling BTC at current prices, institutions are also acquiring more BTC. The simultaneous decline in selling pressure and increased buyer demand is an optimistic trend for Bitcoin.
A pseudonymous trader named “Oddgems”
“More and more #Bitcoin withdraws from exchanges and is likely to be transferred to non-custodial wallets. This indicates that liquidity will be slightly reduced in the future, and selling pressure will also decrease.”
Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, agrees.
He emphasized that as the cash reserves of institutions flow into Bitcoin, the outflow of BTC from exchanges is increasing. He pointed out:
“To be honest, more and more BTC is shifting from exchanges to cold wallet storage. Large listed companies allocate cash reserves to BTC. Incredibly bullish.”
The stagnant convergence of the Bitcoin retail industry and continued institutional demand drove the general sentiment surrounding Bitcoin.
Dan Tapiero, the co-founder of 10T Holdings, also said that due to the surge in institutional interest, a “bitcoin shortage” is possible.
Other supply indicators indicate higher HODLer activity
According to Glassnode, a large part of the Bitcoin supply is stored in “cumulative addresses.” These addresses represent users who have never withdrawn BTC from their wallets, and these users are likely to store BTC for a long time.
When the “HODLing” activity is high, it means keeping BTC for a long time and usually means that the accumulation phase has started. Glassnode said:
Over the past few months, Bitcoin accumulation has been on a continuous upward trend. Currently holding $2.6 million in BTC (14% of the supply) in the cumulative address. Cumulative addresses are defined as addresses that have at least 2 incoming tx and have never used BTC. “
Positive basic on-chain indicators complement Bitcoin’s favorable technical structure. Despite various incidents that may have put selling pressure on BTC, including BitMEX probe and OKEx suspension, BTC is still above $11,400.
The dispute between BitMEX and OKEx has also led to a sharp decline in foreign exchange reserves, which may panic traders. Although BitMEX quickly processed the withdrawals and the OKEx wallet did not flow out, regulatory uncertainty was enough to cause foreign exchange reserves to decline.
BitMEX BTC power supply. Source: CoinMetrics
At the beginning of October, technical analysts identified the range of $11,100 to $11,300 as a key short-term resistance level. BTC has been relatively stable within the above-mentioned range. Technically speaking, this is a positive sign of renewed momentum.