- Bitcoin's exchange reserves have dropped below 2 million BTC.
- The decreasing exchange reserves reflect a trend of investors preferring to hold Bitcoin for the long term.
Bitcoin’s exchange reserves have hit a new low this April, dropping below 2 million BTC. According to BanklessTimes.com, the amount of Bitcoin held on exchanges keeps dropping after ETF approval, falling to 11.66%. The supply available on exchanges has been consistently diminishing since the approval of ETFs on January 11th.
Jonathan Merry, CEO of BanklessTimes, remarked on the data, stating:
The substantial decrease in exchange reserves to 1.94 million BTC, representing approximately 11.66% of the total 19.67 million circulating Bitcoin, implies an impending supply shock amidst growing demand.
Possible Price Surge
After reaching a peak of 2.85 million BTC in July 2021, Bitcoin's exchange reserves have steadily decreased as more investors opt to hold their Bitcoin for extended periods rather than engage in trading activities.
This trend toward holding indicates a growing preference for viewing Bitcoin as a long-term investment. A supply shock, characterized by a significant drop in available Bitcoin supply on exchanges amid rising demand, frequently leads to price surges fueled by heightened buying activity compared to selling.
Significant withdrawals from exchanges, which reduce the available supply for trading, are a primary driver of such shocks, potentially leading to a rapid increase in Bitcoin’s price.
Bitcoin Halving Event
The halving event, expected sometime after April 15, is forecast to be a major catalyst for the price of Bitcoin. The halving event occurs when the underlying blockchain technology of Bitcoin is altered to reduce the rate at which new digital tokens are created by 50%. The halving event will restrict the supply of Bitcoin going into circulation at a time when demand for the cryptocurrency is sky-high, pushing the price upwards as a result.
As some reports highlight, only 1.7 million Bitcoins remain on exchanges. This impending scarcity and the approaching halving event set the stage for a substantial supply shock.
Tether Expands Bitcoin Reserves
The leading stablecoin issuer, Tether, has recently expanded its Bitcoin holdings by acquiring an additional 8,889 cryptocurrency units. This strategic acquisition has pushed Tether’s Bitcoin portfolio to exceed 75,000 BTC, translating to a value of over $5.3 billion. This move aligns with its ongoing strategy to bolster its stablecoin reserves, marking a significant step in its operational and security advancements.
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