Main Points
- Exchange Bitcoin has been steadily decreasing and is at its lowest since 2005. December 2017
- Long-term investors remain optimistic and continue to absorb the supply
- Coins that haven’t been touched in 10 years now exceed those on exchanges.
Recently I wrote an article concerning the exodus of stablecoins from exchanges. The current balance is at its lowest since 2009, October 2021. 45% of all stablecoins exchanged on exchangers have been transferred out in the last four months.
However Stablecoins are not the only digital asset suffering from a lack of liquidity. The world’s largest cryptocurrency is also feeling the impact of funds moving out. Right now, only 11.8% of the full Bitcoin supply is held on exchanges – the lowest level since December 2017.
To remind you, December 2017 was the peak of the last bull run. Bitcoin skyrocketed to $20,000 before plunging into a two-year bear market that devastated the entire industry.
Since January 2020, the amount of Bitcoin held by exchanges has been dropping. Many are pointing out the imbalance between supply and demand. Bitcoin maximalists strongly support the 21 million coins hard supply limit. Bitcoin.
They argue that the price will not be able to rise if the demand is not increasing.
A key part of this theory is the resilience of long-term holders who are keeping their bitcoins. When asked if they kept their coins, the answer is a resounding “Yes”.
The below chart displays the amount of Bitcoin supply divided by time held and compared to the exchange balance.
This is an interesting result, particularly when you take into account the past three years of both euphoric highs and devastating lows. Bitcoin reached nearly $70,000 during the pandemic before taking a major plunge in Fall 2022. The price crashed to $15,000
In the long-term, Bitcoin is undoubtedly bullish. But it all depends on whether there is an increased demand for additional Bitcoin. They will not fail. The supply may be decreasing, but that won’t matter if the demand side does not come through.
This has been a difficult year in terms of capital flight from the sector as well as multiple high-profile scandals like Celsius, FTX and many more. The fear is that these occurrences will damage the cryptocurrency’s reputation and reduce the demand from the institutional side. Why have people been so hesitant to enter the crypto space?
It’s hard to say. But long-term holders seem to have a lot of faith.