- Bitcoin exchange reserves drops to record low levels
- There’s been 7.7% drop, year to date
- 87% drop since October 2019 volume
Bitcoin reserves held in exchanges have dropped to record low levels. This is according to data from CryptoQuant, a blockchain tracking website.
Exchange reserve charts at the website show that the reserves held at exchanges have dropped to values that have not been seen in years. At the time of filing this report on June 10, there are 2.4 million bitcoins in all exchanges.
In comparison to the volume of coins in exchanges reserved at the beginning of the year, 2.6 million, there has been a 7.7% drop in the volume of bitcoins held in exchanges.
Consequence of Exchange Reserve Drop
Exchange reserve is an indication of the health of the market. When the volume of cryptocurrencies in the exchange reduces, it is an indication that more investors are buying the cryptocurrency, so the value of the asset will likely rise. Crypto to fiat shows that people are moving their investments from the crypto space and are caching out to fiat. Under such instances, the volume of exchange reserves increases and the value of the digital currency drops.
On the other hand, if the volume of exchange reserves is dropping as in the current situation, the direction of the price of the assets would be upwards. This is because fiat is flowing into crypto. As the buying pressure increases, the price of the cryptocurrency increases.
87% Decrease from October 2019
According to the Cryptoquant data, the exchange reserve peaked around October 2019 at 3 million bitcoins. This was during a bear market as expected. As expected, many investors would have moved to fiat from crypto if market sentiments are low. Compared to the recent volume of reserve on the exchanges, there has been an 87% drop in the volume of bitcoins held in the exchanges since October, 2019.
According to the market intel platform, Chainalysis, the crypto to fiat exchange flow in the past 7 days has averaged $335 million, while crypto to fiat movement has averaged $108 million in crypt0 to crypto exchanges. The data also shows that the movement of assets from crypto-crypto exchanges to crypto-fiat exchanges has dropped by 33% in the past 7 days.
Reserve Versus Price Correlation
It is important to note that the exchanges reserves flow does not always correlate with price. Equally important is the fact that only a small fraction of Bitcoin circulating supply is held on exchanges, In fact, recent data shows that just 9.9% of Bitcoin circulation are held on the exchanges at the moment. This is also a record low from 2018 value.