Seller shortage? Bitcoin exchange reserves plunge as BitMEX bleeds BTC

Seller shortage? Bitcoin exchange reserves plunge as BitMEX bleeds BTC

(BTC) exchange reserves are continuously plummeting as analysts pinpoint the trend to a shortage of sellers. Since the March crash, the reserves on exchanges rapidly fell from 2,950,000 BTC to 2,700,000 BTC.

Within merely seven months, a 250,000 BTC fall in exchange reserves signifies a $2.85 billion decline. Behind the steep trend could be two major factors: a decline in sellers and lower trust toward exchanges.

Analysts mainly attribute the sustained drop in Bitcoin exchange reserves to an overall shortage of sellers in the market.

As retail sellers refrain from selling BTC at current prices, institutions are also acquiring more BTC. The simultaneous drop in selling pressure and an increase in buyer demand is an optimistic trend for Bitcoin.

A pseudonymous trader known as “Oddgems” said the data shows Bitcoin is likely moving from exchanges to non-custodial wallets. If so, it indicates that investors are moving their funds to hold for a longer period. He said:

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Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, echoed the stance.

He emphasized that BTC outflows from exchanges are growing as cash reserves from institutions are flowing into Bitcoin. He noted:

The confluence of stagnant retail outflows from Bitcoin and the consistent demand from institutions buoy the general sentiment around BTC.

Dan Tapiero, the co-founder of 10T Holdings, similarly said that “shortages of Bitcoin” is possible due to the surging institutional interest.

According to Glassnode, a large portion of the Bitcoin supply is stored in “accumulation addresses.” These addresses represent users who never moved BTC from their wallets, who are likely storing BTC for the long term.

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When “HODLing” activity is high, which refers to holding onto BTC for prolonged periods, it typically indicates the start of an accumulation phase. Glassnode said:

The positive fundamental on-chain metrics supplement the favorable technical structure of Bitcoin. Despite various events that could have applied selling pressure on BTC, including the BitMEX probe and OKEx withdrawal suspension, BTC remains above $11,400.

The BitMEX and OKEx controversy also led exchange reserves to decline sharply, possibly spooking traders. Although BitMEX swiftly processed withdrawals and OKEx wallets show no outflows, the regulatory uncertainty was sufficient to cause exchange reserves to slip.

In early October, technical analysts pinpointed the $11,100 to $11,300 range as a critical short-term resistance range. BTC has been relatively stable above the said range, which technically is a positive sign for renewed momentum.

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