BTC balances on cryptocurrency exchanges have been declining since the beginning of the bull run. Volumes were expected to grow once the digital asset reached a new all-time high in October. However, this was not the case. Previous trends have often indicated that balances increased during bull markets as investors moved their coins to exchanges to make a profit. This bull market has defied all expectations and continues to do so.
Outflows from exchanges outweigh inflows because investors are collectively withdrawing BTC from exchanges. The volumes of exchanges in relation to BTC’s outstanding supply fell to three-year lows. Balances are now at levels not seen since January 2018. This has led to a reduction in supply on crypto venues, which has caused a huge drop in selling pressure.
Large exchanges are facing declining BTC balances
Big exchanges like Binance, Coinbase and Huobi recorded large transfers of BTC from their exchanges. Binance recorded the highest outflows in the last week with 21,000 BTC. This is one of the sharpest declines recorded on the market.
Thousands of BTCs also left the exchange on Huobi last week. In the last seven days, it has recorded 8,000 BTC selected BTC. The outflow from the exchange culminated in a 9% decrease in the volume of BTC held there.
These outflows are no longer surprising given that the market has been following this trend continuously over the last few months. The growing shortage has led to growing buying pressure as investors try to acquire as many digital assets as possible.
Crypto exchanges hold 12.94% of BTC supply
The share of exchanges in the total supply in circulation fell sharply in October. Exchanges currently holds 2.44 million BTC. This represents 12.94% of the total supply in circulation, which is a new three-year low. Last week alone, a total of 27,500 BTC left the exchanges.
Trends in the charts show that the volume held by these exchanges has been steadily declining as the price of BTC has risen. Sale pressure eased in the months following June, leaving room for further accumulation. Investors decided to keep their assets instead of moving them to the exchanges to make a profit.
Glassnode figures show that Coinbase holds 29% of BTC’s global reserves. Despite a sharp decline in its balances, Binance still holds 21% of BTC’s world reserves. Gemini holds the third largest volume with 12% of global inventory.