Bitcoin (BTC) supply on exchanges is declining even as the price of the prominent token continues to fluctuate wildly. Several days ago, on December 13th, BTC supply on exchange platforms was at its lowest across the last 31 months.
Exchange supply only accounted for a meagre 11.96% of total asset supply, according to Santiment. Furthermore, the crypto data analyzing platform also sees the paucity of BTC supply as a welcome boon for investors. This is because it offsets the probability of any significant sell-offs. As Santiment put it:
“Prices have been volatile as of late, but the lack of BTC moving to exchanges right now is a positive sign that significant selloff risk should be limited.”
Bitcoin supply on exchanges can be viewed as a measurement of the overall network activity of the digital currency. Furthermore, it can also signal the next direction BTC may be going in the short to medium term.
BTC’s recent drop below the $50K price level reveals a lot of accumulation or ‘hoarding’ by whales. The primary reason for this retention is to capitalize on any potential price rally that may spring from the scarce supply. In addition, this behavior, dubbed HODLing, also cushions investors since they are insulated from near-term price changes.
As at the time of writing, BTC was changing hands at just under $49K.
Image Credits: Pixabay
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