Only 6.3% of total Bitcoin left on cryptocurrency exchangeswritten by Bella Palmer
The drop in supply is nothing new, with a downward trend since Bitcoin halved in 2020 when the BTC block reward was cut in half
The supply of Bitcoin (BTC) is depleting to levels not seen in years. In a recent tweet from CryptoRank, only 6.3% of the total Bitcoin supply, or 1.3 million BTC, is held on cryptocurrency exchanges.
The drop in supply is nothing new, with a downward trend since Bitcoin halved in 2020 when the BTC block reward was cut in half. The availability of BTC on exchanges has followed suit, slowly declining over the past year.
Exchange wallets accounted for 9.5% of the BTC supply in October 2020, just ahead of historic Christmas 2020 highs, and 7.3% in July this year. December’s 6.3% figure is the lowest recorded in 2021.
The dominance of Coinbase’s BTC wallet is also decreasing. The US exchange held more BTC than all other exchanges combined. Its dominance has grown from 50.52% to 40.65% in the past year.
The news follows a series of positive price metrics that match Bitcoin’s rising price action. First, the supply of illiquid BTC froze for the winter, as the supply of BTC switching from a ‘liquid’ state to an ‘illiquid’ state is now 100,000 BTC per month.
Essentially, more BTC is locked in a cold store than the amount extracted.
Glassnode, the chain analytics company, shared more optimistic news regarding the trading behaviour. The seven-day moving average of BTC trade entry volume has just hit a 5-month low at 978.452 BTC and has trended down week after week. The shortage of supply in the exchanges may continue with less and less BTC sent to the exchanges.
Also, it is important to note that many retail investors and some companies store their BTC on exchanges, indicating that the ‘illiquid’ BTC may be even lower. Some BTC hodlers would leave custody of their keys to exchanges instead of taking their BTC offline in a cold warehouse.
This article is for information purposes only.
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