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Bitcoin exchanges record 7% fall in BTC capacity; investors to long?

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Since the second week of March, Bitcoin’s valuation has been on a roller-coaster. Not only has it gone under $4000, but it has also recorded brief consolidation under $4800, a quick re-test of $7000, and major consolidation between $5500 and $6500. With volatility calling the shots in the industry, it is only obvious that a lot of Bitcoins are being moved around in the space.

According to a recent report by Glassnode, Bitcoin’s exchange net flow indicated that a significant amount of BTC has been leaving several exchanges post the market crash on 12 March. Data suggested that the amount of Bitcoins held by platforms had fallen by 7 percent over the past two weeks.

Bitcoin’s exchange net flow indicates the difference between the amount of Bitcoin entering the exchanges and the amount of Bitcoin leaving the exchanges. Since the crash, there has been an extreme disparity between exchange inflows and the outflows. In spite of Bitcoin’s price recovery, the inflow of BTC to exchanges has been low, compared to previous historical levels.

Source: glassnode

On observing the chart above, it can be observed that both the volumes of inflows and outflows spiked during the price crash. However, the volume of Bitcoin, in terms of exchange outflows, registered a relatively small decline, in comparison to inflows.

Exchange outflows continued to surpass inflows in this manner, and the number of Bitcoins continued to leave exchanges after registering a high in February.

Source: glassnode

The number of Bitcoins outflowing from exchanges can be identified in the above chart. After registering a high of 2.41 million BTC in January, the number of BTC in exchanges had dropped down below 2.25 million tokens.

Although exchange inflows in Bitcoins fell over the past two weeks, the number of Bitcoins on the exchange continued to remain fairly high, in comparison to a majority of periods since April 2017.

Source: glassnode

However, the report added,

“Unlike deposit volume, the total number of daily deposits to exchanges is at its lowest level in the past 3 years. The number of daily BTC deposits to exchanges hasn’t been this low since September 2016, 3 and a half years ago.”

It can thus be assumed that the number of Bitcoins falling on collective exchanges can be taken as a positive since it would improve circulation and increase a bit of supply in the market. This would, in turn, further allow long-term positions to be filled up by investors as prices continue their mediation through a volatile period.


Biraajmaan is a full-time journalist at AMBCrypto covering the US market. A graduate in Automobile engineering, he writes mainly about regulations and its impact with a focus on technological advancements in the crypto space.
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