Following the correction that brought the price of Bitcoin (BTC) below $12,000, some investors began to worry about the possibility of another collapse of the crypto market, similar to the one that occurred on March 11.
However, data from CryptoQuant, an on-chain analysis company, suggests the opposite, as Bitcoin reserves on exchanges reached the lowest value of the year. Ki Young Ju, CEO of CryptoQuant, commented:
„People continue to worry about a large sell-off similar to March, but the exchanges do not have the same amount of Bitcoin inactive (ready to be sold) that day.
The Bitcoin reserves parameter on exchanges indicates the amount of BTC held within the exchange platforms. When the figure reaches a minimum, it suggests that investors have withdrawn their coins from the exchange to keep them in a safer and more permanent place.
Chainalysis data shows that the number of BTCs held for periods up to 52 weeks is increasing. In addition, the on-chain Glassnode analysis platform has recently observed a similar behavior, commenting that „the decline in Bitcoin balances on exchanges indicates reduced sales pressure.
At the time of writing, 2.6 million BTCs are on exchanges, a lower figure than the 2.9 million BTCs reported before the March crash.
Miners are not selling
The CryptoQuant data also revealed that the miners are choosing to retain the BTC earned.
This suggests that they are expecting higher prices, and is a of positive sentiment, as the miners make up a significant portion of the selling pressure in Bitcoin, and consequently exert some influence on the price of the crypto asset.
Bitcoin hash rate is also on the rise, another bullish signal dictated by the fact that more people consider the price of BTC more reliable above the production price, which explains the strong correlation between hash rate and price.
Although the number of BTCs on exchanges is currently at a low for 2020, CryptoQuant data indicates that this figure may change soon, as Bitcoin inflows to exchanges are increasing. According to Ki Young Ju, a higher amount of BTCs sent to exchanges is generally a bearish signal:
„BTC (netflow) inflows to exchange spot could indicate a potential selling pressure, stablecoin inflows indicate a potential buying pressure“.
Although the increase in Bitcoin inflows to exchanges is usually bad news, USDT transfers are also on the rise. According to Glassnode data, they reached a new high for 2020 on August 17.