Bitcoin Reserves on Crypto Exchanges Hit Lowest Point Since 2022

Bitcoin Reserves on Crypto Exchanges Hit Lowest Point Since 2022

The total reserves of Bitcoin across all cryptocurrency exchanges have continued to decline, reaching their lowest level in the past three years. These reserves represent the amount of Bitcoin available for trading on these platforms.

According to data from CryptoQuant as of June 20, the current Bitcoin reserves on exchanges have dropped to 2,826,385 coins. This marks a decrease from January 2024, when the reserves were at 3,053,908 BTC.

Total Bitcoin supply across exchanges as of June 20. Source: CryptoQuant

Declining Bitcoin Reserves Indicate Low Selling Pressure

The reduction in Bitcoin reserves suggests low selling pressure, which could lead to a supply shock as the available supply for purchase remains relatively low.

Bitcoin Supply Shrinks Post-Halving

Bitcoin's supply has become increasingly constrained following the halving event on April 20. This event cut the block reward miners receive from 6.25 BTC to 3.125 BTC, effectively halving the new supply of Bitcoin entering the market.

Recent reports indicate a significant drop in Bitcoin mining output in the United States by up to 40% in May due to the halving. For example, Riot Platforms reported a 43% decrease in Bitcoin production, dropping from 375 BTC in April to 215 BTC in May. Similarly, CleanSpark saw a 42% reduction in Bitcoin output, from 721 BTC to 417 BTC over the same period.

Impact of Bitcoin ETFs

In May 2024, digital asset investment products saw monthly inflows reaching $2 billion, largely driven by investments in Bitcoin ETFs. According to CoinShares, these investment products hold nearly $73 billion in Bitcoin globally.

However, CoinShares also reported an outflow of $621 million from Bitcoin ETFs during the past week, marking the largest outflow since March 22, 2024. This is likely influenced by macroeconomic factors and a hawkish stance from the Federal Reserve's Federal Open Market Committee (FOMC), which signaled only a single rate cut in the US for 2024. This cautious outlook has led investors to shy away from investing in assets with fixed supplies, such as Bitcoin.

Conclusion

The continuous decline in Bitcoin reserves on cryptocurrency exchanges, now at their lowest point in three years, highlights a crucial trend in the crypto market. This reduction in available Bitcoin for trading suggests low selling pressure and the potential for a supply shock. Such a scenario could influence Bitcoin's price dynamics significantly, especially as the reduced supply might not meet potential increases in demand. The aftermath of the April halving, which slashed miners' rewards, further constrains Bitcoin’s supply, adding another layer of complexity to the market dynamics.

Additionally, while Bitcoin ETFs have attracted substantial investments, recent large outflows reflect a growing caution among investors. Economic uncertainties and the Federal Reserve's hawkish stance on interest rates have prompted many to reconsider their investments in fixed-supply assets like Bitcoin. As these macroeconomic factors continue to evolve, they will likely play a pivotal role in shaping Bitcoin's market trajectory, balancing between reduced supply and fluctuating investor sentiment.

Read too : Crypto Investment Products See Largest Outflows Since March 2024

*Disclaimer:

This content aims to enrich reader information. Always conduct independent research and use disposable income before investing. All buying, selling, and crypto asset investment activities are the reader's responsibility.