BTC On-Chain Analysis: Exchange Balances Continue Drying Up

Share Article
In Brief
  • The BTC balance on exchanges reached a yearly low on September 26.

  • The exchange balance net position is consistently decreasing.

  • Funding rates are close to 0.

  • promo

    Stake your points and qualify for the 200,000 USDT prize pool. Start staking now!

The Trust Project is an international consortium of news organizations building standards of transparency.

A look at on-chain indicators for Bitcoin (BTC), more specifically those related to exchanges and institutional investors.

Sponsored



Sponsored

After a brief period in May in which exchange balances were increasing, they have started to dry up once more and reached a yearly low on Sept 26.

BTC Exchange balance

The total amount of BTC that is held on exchange wallets has been steadily moving downwards since March 2020, when an all-time high of 3,118,057 BTC (black arrow) was held in such addresses. 

Sponsored



Sponsored

The decrease led to a low of 2,494,840 on April 11. This meant that during this time, investors had been steadily buying BTC from exchanges. 

Following the May price drop, the number of coins held on exchange addresses began to increase, potentially as a result of investors transferring their coins in order to sell, it has been moving downwards once more, reaching a lower low of 2,452,843 on Sept 29.

Chart By Glassnode

This is better visualized with a closer look at the movement since May. This shows the indicator increasing during May, when the BTC price fell towards $30,000.

However, after the ongoing upward movement that began in July (black circle), the balance on exchange addresses has been drying up once more.

Chart By Glassnode

Trend signals

A look at the exchange net position change shows that after the previously outlined period in which net inflows were positive (black circle), they have become negative once more. 

As is visible from the 2017-2020 readings, positive net position changes are a staple of a bear market. This occurs because investors rush to take profit and sell their coins. Furthermore, they occur during the beginning of bull markets, when investors are realizing profits. 

However, a negative net position change is usually a sign of accumulation, which occurs during a bullish trend.

Chart By Glassnode

Furthermore, the funding rates are close to negative. This does not provide a clear sentiment for the trend. Funding rates increase/fall significantly during times of euphoria or panic, when the BTC price rises/drops quickly for a short-period of time. 

Chart By Glassnode

For BeInCrypto’s latest Bitcoin (BTC) analysis, click here.

What do you think about this subject? Write to us and tell us!

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.
Sponsored
Share Article

Valdrin discovered cryptocurrencies while he was getting his MSc in Financial Markets from the Barcelona graduate school of Economics. Shortly after graduating, he began writing for several different cryptocurrency related websites as a freelancer before eventually taking on the role of BeInCrypto's Senior Analyst.

Follow Author

Limited offer! Learn to mine and trade crypto today for free

Join

Earn up to $10,000 USD every week in CoinFLEX AMM+ Arena!

Earn Now

Be our Supreme Scorer and qualify for a grand prize pool of 200,000 USDT!

Join