On-chain analysis provider Santiment reported that the supply of Bitcoin sitting on the exchanges has fallen to levels not seen since May 2019. This is usually considered bullish as investors take BTC off exchanges when they’re in a position to hold and are not interested in selling.
Santiment called this a “good sign of reduced risk of sale”. Bitcoin prices have been falling this week in the wake of a renewed crackdown in China and another round of FUD (fear, uncertainty, and doubt) that followed it.
Since Monday, BTC prices have fallen by around 2.4%, which is a fairly normal range for an average trading week.
Stablecoins Ready to Buy?
Santiment also observed that the amount of stablecoins, specifically Tether, residing on exchanges has not been this high since June, suggesting that buying side pressure could be increasing. According to the analyst firm, 17.6% of the total supply of USDT is currently based on trading platforms.
Glassnode has backed up the hodl narrative in its weekly report issued on Monday, which states that on-chain activity for Bitcoin has been in decline. On-chain active entities find themselves in what he describes as a “bearish activity channel” as network participation slows down.
“This adds weight to the argument that the market may be dominated by HODLers and traders, with less participation by newer entrants and retail speculators.”
There’s also the premise that exchanges now use transaction batch processing, and Lightning Network adoption has increased, which can make some of the metrics misleading.
By observing the net entities’ growth, the analytics provider concluded that the majority of today’s market participants are longer-term hodlers and accumulators. Large-scale accumulation occurs in both early bull markets and later stage bear markets.
Glassnode also reported that the amount of Bitcoin that is “highly liquid” has returned to December 2018 levels, further supporting the outflow from exchanges metrics.
Bitcoin Price Outlook
BTC was changing hands around $ 42,000 at the time of writing, after falling 3.5% that day. Resistance is at $45,600, where the 200-day moving average lies, and that indicator has now started to drop, suggesting a longer-term bear pattern according to Tradingview.
Support currently sits at $ 41,150, and the asset has trended downward for the past 3 weeks.
