Whenever there is a change in the crypto market, it holds significance. For instance, if the market capitalization of a crypto token increases, it indicates that the price is also increasing.
Recently, the Bitcoin exchange supply saw some unusual increases. And now some traders are unsure of what it'd imply. What could this mean for the crypto market? What next should one expect from the market?
To be more precise, there was around a 3.1% increase in Bitcoin exchange supply within the past 14 days. What could this mean? Well, let's take a deep dive.
Bitcoin Exchange Supply Increasing, What Does this Mean?
Data from the on-chain analytics firm Santiment shows that crypto exchanges have received massive amounts of Bitcoin supply. From the definition provided by the on-chain data providers, "supply on exchanges" is the percentage of the total circulating Bitcoin supply in centralized exchanges.
Note that this is not the funds held by the exchange themselves. But the customers or wallet holders in the centralized exchange. So, what this means is that in the past 14 days, centralized exchanges have received some significant amount of Bitcoin deposits.
📈 #Bitcoin has enjoyed a slight +2% price jump, returning back to $26.3K for the first time in a week. Keep an eye on the supply of $BTC on exchanges, which has increased by 3.1% in 2 weeks. Traders appear to be motivated to take small profits. https://t.co/BOySHhMQ2O pic.twitter.com/AVWdS8sgMb— Santiment (@santimentfeed) September 7, 2023
When there's a Bitcoin increase in supply in the exchanges, it signifies a significant move in the market. This metric increase shows that crypto holders have been depositing much Bitcoin into the crypto exchange. In other words, they are sending their funds from an unknown wallet they were holding for profit to the exchange.
Most investors seem to be selling their crypto holdings. This move is mainly interpreted as a sell-off. Even novice investors in the crypto industry understand that leaving unused funds in a crypto exchange is not a wise decision.
So, Bitcoin holders sending their Bitcoins to exchanges means they are selling off. Subsequently, selling off tokens is also bad news for Bitcoin. When traders sell off, it shows they lack confidence in the token's current price support. In other words, they expect the token to decrease in price. Selling off, in turn, makes the price of Bitcoin go down.
What of when these metrics decrease?
Investors take their funds away from exchanges when the Bitcoin supply on Exchanges decreases. Whenever an investor takes their money away from exchanges, they either send it back to their custodian wallet or invest it in other places like yield farms. But the major highlight here is that they are not selling, which is good for the price of Bitcoin.
Bitcoin Price Update
At the time of writing, Bitcoin price has been moving around the $25k level in the past 24 hours. Looking at the charts, the apex cryptocurrency has been engulfed by the bears for the past day, making a breakout look quite far-fetched.
The weekly chart looks the same as the daily charts, as the bears take a substantial part of the chart. There are only a few green appearances from the bulls. In the Bitcoin weekly chart, the lowest price is $25. 93k, while the highest price was $26.37k. That's generally a poor market outlook. The monthly indicators are not saved from the same embarrassment as the crypto price is down by more than 12% in the past 30 days, with all of them looking red.