On-chain data from Glassnode show that there are now only 2.3 million Bitcoin on crypto exchanges. To put this value in perspective, that represents less than 11 percent of all 21 million BTC.
Just a year ago, there were an impressive 2.6 million BTC in the vaults of crypto exchanges. The development seems clear: more and more investors are withdrawing their BTC from exchanges in order to store them themselves. In the last 12 months alone there were around 400,000 BTC.
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With only 2.3 million BTC left on the exchanges, there are signs of an increasing shortage of BTC available for sale. This could indicate that more and more investors are storing their Bitcoin in private wallets or cold storage solutions instead of leaving it on exchanges. The motivations for this can be varied, from security concerns to the desire to invest for the long term and not react to short-term price movements.
Bullish development for Bitcoin
A decline in Bitcoin holdings on exchanges often indicates that investors do not intend to sell their holdings in a timely manner. This could indicate that they are convinced that the price is about to rise or that they want to hold their coins for a longer period of time for other reasons. Of course, if these BTC are no longer available for immediate sale, that reduces the supply on the exchanges. And if supply falls while demand stays the same or even increases, that can drive the BTC price higher.
The declining BTC inventory may also reflect that sophisticated investors are increasingly moving their holdings to cold wallets, or to other cryptocurrencies or stablecoins. However, if demand for BTC increases in the next bull run, it seems likely that this will be disproportionately reflected in the price due to the ever-increasing shortage of Bitcoin on crypto exchanges. But be careful: Conversely, a whale that decides to sell a large amount of BTC due to reduced liquidity on exchanges can also have a significant impact on the price.
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