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Bitcoin volatility sees exchange supply plummet to 1.5 year low

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TL;DR Breakdown

  • Crypto trading platforms are holding the lowest amounts of Bitcoin(BTC) in one and a half years.
  • The platforms hold a paltry 12 percent of the BTC’s maximum supply.

Crypto exchanges hold the least amount of Bitcoin in one and a half years. That’s according to data analytics firm Santiment. According to the firm’s analysis, digital currency exchanges held about 12 percent of BTC’s fixed supply as of December 13, 2021.

In their analysis, Santiment avers that the coin’s instability is to blame for the declining holdings. The king crypto has experienced a turbulent few weeks recently. That saw its value dip under the USD50,000  level.

BTC’s positive outlook

Nevertheless, the firm is projecting positive prospects for the coin. It holds that this dwindling supply limits possibilities of substantial cashing-ins by BTC holders. 

Santiment’s tweet on BTC exchange supply.

Again, Santiment suggests that the supply of  Bitcoins on exchanges is indicative of its network’s performance. So it can point to the crypto’s short and medium-term directions. 

The most straightforward explanation of this turn of events is that users have transferred their bitcoin from the exchanges. One assumption is that many prefer holding it in cold storage. They reckon that BTC will experience an upsurge in value in the long term.

Coincidentally, Bitcoin’s transaction value plunged to a ninety-day low. These figures, in turn, lay credence to the above notion. Moreover, continued hodling eases the pressure to sell. That’s due to growing investor confidence in a steady revision of the bearish tendencies.

Bitcoin whales are HODLing

All in all, that dipping under the $50,000 level points to increased accumulation at that mark. Bitcoin whales have opted to HODLing, expecting a price rally. This HODLing shields investors from sudden price shifts.

Increased HODLing keeps with BTC’s rising use as a store of value. By publication time, it was exchanging at about $49,000. The price is an appreciation of less than one percent in 24 hours.

Alternatively, BTC’s supply drop could indicate users are shifting to new trading platforms. Mobile apps, for instance, are increasingly becoming an alternative to the exchanges. These provide crypto lovers the flexibility and convenience of trading that exchanges don’t.

The rising popularity of these alternative platforms coincides with ongoing clampdowns on different exchanges. Regulators in many countries have tightened their oversight of those platforms creating uncertainty among investors. 

Consequently, some have resorted to withdrawing their deposits from exchanges. They’re doing so in anticipation that some exchanges might limit access to users’ funds.

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