Bitcoin reserves on cryptocurrency exchanges near 2016 levels – Bull market coming soon?

Bitcoin reserves on cryptocurrency exchanges are close to reaching 2016 levels, which could signal the arrival of a bull market.

According to CryptoQuant, Bitcoin reserves on cryptocurrency exchanges hit their 2024 all-time high (ATH) on January 31 at $3.06 million. However, that number has since started to decline. As of September 15, reserves had fallen to $2.6 million, marking the all-time low (ATL) for BTC reserves in 2024.

Historically, the price of Bitcoin and its reserves on exchanges have moved hand in hand. As the price rose, reserves rose as well. However, this trend broke in March 2024.

Why are Bitcoin reserves on exchanges decreasing?

The decline in Bitcoin reserves on exchanges suggests that traders are moving less BTC to cryptocurrency exchanges. One reason could be that many prefer cold wallets, which offer more security.

If the main reason is a preference for cold wallets, this could indicate that traders intend to hold the coin for the long term, keeping it as far away from exchanges as possible.

Typically, a drop in Bitcoin reserves on exchanges is seen as a positive sign, as traders are likely holding onto their assets. In contrast, if this number rises rapidly, it could signal a bear market, as traders may be more willing to sell BTC rather than hold on.

Whales continue to buy Bitcoin

Bitcoin reserves are approaching 2016 levels. This possibly indicates that sellers are leaving the market. According to CryptoQuant, the Bitcoin whale ratio on cryptocurrency exchanges has been increasing since the beginning of 2024.

This year, the whale ratio reached its highest level in the last three years, rising to 0.9 on July 24, compared to 0.4 on December 31, 2023.