Bitcoin Exchange Balance Hits 6-Month Low, Here’s The Implication
Highlights
- Bitcoin exchange balance is falling as a steady slow pace
- Bitcoin supply crunch fueled by institutional investor embrace of spot BTC ETF
- The liquidity crunch trend may grow the more with nation-state adoption in view
The Bitcoin exchange balance has jumped to its lowest level since July 2024 as the broader market takes a major shift. According to insight from Glassnode, this exchange BTC supply has now dropped below the 3,000,000 support zone.
Bitcoin Exchange Balance: Historical Trend
Per the Glassnode data, the total BTC on centralized trading platforms as of July 2024 came in at 3.1 million. However, at the moment, this balance has dropped to 2.74 million BTC, underscoring the asset’s depletion rate.
The Glassnode insight came with a chart showing the BTC exchange balance since at least 2016. At the time, the premier coin gradually increased from 1 million BTC in 2017 to 3 million BTC in 2019. During this period, the price of Bitcoin ranged from $1,000 to around $17,000.
The total Bitcoin exchange balance attained an all-time high around June 2022, with 3.3 million BTC lodged on trading platforms. However, there has been a gradual decline in this metric, which dropped to a low of 2.74 million at the time of writing.
From the historical BTC balance on these exchanges, the fluctuations have been accompanied by a gradual growth in the price of the coin.
BTC Exchange Balance: Cause and Effect
The demand for Bitcoin in the open market has forced the decline in the balance on trading platforms. One primary source of depletion is the spot BTC exchange-traded fund (ETF) market. Since their emergence in January 2023, institutional demand for these products has grown remarkably.
As reported by CoinGape, Bitcoin ETFs turned one earlier this month. A major milestone features the combined accumulation of over 1 million BTC units. This aligns partially with the balance depletion on trading platforms.
Meanwhile, the April 2024 halving cut the emissions rate for the coin by 2. This introduced a scarcity that also impacted the balance on trading platforms.
The Bitcoin exchange balance fuels scarcity in the open market. This, in turn, triggers a potential rally in the coin’s price. Since July 2024, the cryptocurrency has recorded multiple all-time highs (ATH), a major effect of the supply crunch.
More Supply Crunch Incoming
While the Bitcoin exchange balance appears low, experts believe more crunch is ahead. Firms like MicroStrategy, which has a corporate BTC strategy, have continued to fuel bulk coin purchases. As CoinGape reported earlier, MicroStrategy acquired 10,107 BTC earlier this week, bringing its balance to 471,107 units.
The firm has plans to buy more in the future, and it has influenced other corporate entities like Metaplanet and Semler Scientific to join the trend.
Countries are now showing interest in keeping a strategic Bitcoin reserve. The Czech National Bank Governor Aleš Michl is proposing billions in Bitcoin purchases. If these pull through, it might further add to the exchange liquidity strain.
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