Bitcoin
Bitcoin [BTC] Yes, supply on exchanges is at a 4-year low, but there is more
While BTC’s price action has been mostly sideways of late, it’s worth noting that on 18 October, a significant number of coins were moved off exchanges. Now, what does that mean? Well, for starters, it de-risks the future prospects of a sell-off. However, looking at other datasets like whale holdings can give us a better idea of what to expect going forward.
During the intraday trading session on 18 October, the leading coin Bitcoin [BTC], recorded a surge in activity across various exchanges, data from Santiment showed.
According to the blockchain analytics platform, BTC saw a significant rally in the number of coins taken off exchanges and a continued decline in the asset’s supply on exchanges.
On 18 October, with a daily amount of 40,572 BTC, the king coin registered its largest net flow of coins away from exchanges since 18 June. In addition, the leading coin’s supply on exchanges dropped to a 4-year low of 8.48% on the same day.
? #Bitcoin saw a massive surge of coins moving off of exchanges yesterday, its largest daily amount (40,572 $BTC
) in 4 months. The supply of coins on exchanges is down to 8.48%. As exchange supply decreases, it de-risks chances of a future sell-off. https://t.co/gi4ki39Z6T pic.twitter.com/OKtdS6RUJY— Santiment (@santimentfeed) October 19, 2022
Typically, a decline in an asset’s supply on exchanges indicates a drop in selling pressure. Also confirmed by Santiment, “as exchange supply decreases, it de-risks chances of a future sell-off.”
What do other metrics tell us about the possible price direction of the leading asset in the short term?
Know this and know peace
More often than not, the intensity of whale holdings determines the direction an asset’s price would go. As regards BTC, holders of various amounts of the coin have ramped up holdings in the past few months, data from Santiment showed.
Since April, the number of whales holding 10 to 100 BTC has increased by 3%. For holders of 100 to 1000 BTC and 10,000 to 100,000 BTC, their count has also spiked by 0.2% and 16%, respectively, within the same period.
A continued rally in these indexes can help push up the price of the leading coin.
Source: Santiment
For a sustainable rally in price to happen, BTC that lies dormant in wallet addresses needs to see some action. A look at the asset’s Mean Coin Age metric revealed that older coins have failed to change hands in a while.
On a 180-day moving average, BTC’s Mean Coin Age was in an uptrend at 78.422. To see any major growth in price, this metric has to take on a downtrend, as this would mean increased movement of BTC between addresses.
This position was confirmed by a 180-day moving average assessment of BTC’s Mean Dollar Invested Age (MDIA). As of this writing, this was also in an uptrend at 1310.
A continuous upward movement indicates some stagnancy on the BTC network; hence, any major price move might be difficult.
Source: Santiment
It is also pertinent to point out that due to the persistent decline in BTC’s price in the past few months, several holders have counted losses on their investments, data from Santiment showed.
An assessment of BTC’s MVRV on a 180-day moving average confirmed this. At press time, the metric was at the -15.5% mark.
Before you make your next trade, note that a negative bias towards the asset has lingered in the past few months and may have a say on where the price goes next.
Source: Santiment
