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Bitcoin Supply on Exchanges Falls To Lowest Point in 4 Years, Further Reducing Massive Selloff Risk

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The percentage of Bitcoin (BTC) supply on exchanges is currently less than 9% for the first time since 2018.

Despite the market turbulence, Bitcoin (BTC) has retained its crown as the top crypto-asset. In tandem with other cryptocurrencies, the asset has been caught in a bearish pattern for most of this cycle.

Notwithstanding this unfavorable climate, it appears BTC holders are gearing for a takeoff, as the BTC supply ratio on exchanges falls below 9% for the first time since 2018. Investors usually send their assets to spot exchanges with the intent to sell. Conversely, when they are determined to retain their assets, they take them off exchanges, often to cold or private wallets.

Crypto behavior analytics platform Santiment recently highlighted the metric. 

“Bitcoin continues to see its supply moving away from exchanges as traders show further signs of being content with their current holdings. With less than 9% of BTC on exchanges for the first time since 2018, it is a good bode of confidence for bulls,” Santiment noted in a tweet Tuesday, revealing a chart to support the claim.

Santiment highlights that such a low supply on exchanges diminishes the chances of a sharp BTC fall.

From the Santiment chart, a sudden dip in the supply ratio of Bitcoin on exchanges is observable. Since reaching a peak of over 14% in June of last year, the ratio of BTC on crypto exchanges has steadily declined. This pattern indicates investors’ growing intention to keep their Bitcoin holdings despite the inauspicious weather.

Nonetheless, BTC exchange inflows saw an uptick sometime between late April and May. This spike can be attributed to the Terra collapse, which pumped a massive wave of FUD into the community, precipitating a contagion of capitulation and deleveraging.

As the dust settled, investors can be seen taking their BTC off exchanges. A sharp dip is observed as we reach late September, taking the ratio to 8.98%. The current ratio was last seen in November of 2018, when BTC was trading between $4k and $6k following a fall from the lofty $19k.

The fact that BTC investors are looking to HODL their assets at this point indicates the generally bullish outlook on the asset despite its recent shortcomings. To corroborate this pattern, the CryptoQuant BTC Exchange Reserve indicator shows an encouraging decrease in BTC reserve on exchanges. The BTC accumulation level reached a high last witnessed in 2015 when the asset was getting more mainstream attention. Ki Young Ju, CEO of CryptoQuant revealed the bullish metric on Twitter in the late hours of Monday.

“BTC accumulation level reached a 7-year high. Over 6-month-old Bitcoins now take 74% of the realized cap. It was 70% and 77% at the last bottoms in 2019 and 2015, respectively,” he said.


He highlighted the extreme difficulty in keeping one’s BTC unmoved in 6 months despite the current market turbulence. Most BTC investors have a strong will to achieve this, bespeaks bullish sentiments. In addition, the BTC Binary CDD metric reveals a low long-term holders’ movement.

As on-chain metrics reach massively bullish levels, BTC has solidified its position above the $19k support. The asset is changing hands at $19,845 as of press time, up 3.39% in the past 24 hours.

Despite seeing a dip on the second day of the month, BTC has managed to stand its ground above the support at $19k in October. As the asset reaches $20k, it aims to conquer the $ 19k zone comfortably. October has historically been one of the most bullish months for Bitcoin, so the community expects some relief rallies to regain the losses of previous months.

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Albert Brown
Albert Brown
Albert Brown is a cryptocurrency investor and journalist who has been in the nascent space since 2017. His love and passion for technological innovations made him delve deeper into the world of blockchain and cryptocurrencies. As a journalist, Brown has written on several crypto-related topics that have been referenced by popular industry players like Tyler Winklevoss, Binance CZ, etc.

Disclaimer: The content is for informational purposes only, may include the author's personal opinion, and does not necessarily reflect the opinion of TheCryptoBasic. All Financial investments, including crypto, carry significant risk, so always do your complete research before investing. Never invest money you cannot afford to lose; the author or the publication does not hold any responsibility for your financial loss or gains.

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