Over the past two weeks, the quantity of Bitcoin held within centralized crypto exchanges saw a 3.1% surge. While various factors might underlie this movement, pundits analyzing blockchain data often interpret the shift as a negative development.
BTC Exchange Inflows Increasing Considerably
Data from on-chain analytics firm Santiment shows a steady increase in Bitcoin deposits on exchanges. The “supply on exchanges” refers to the percentage of the total circulating supply of BTC currently held in the wallets of all centralized exchanges. This metric has increased by 3.1% in two weeks as traders look motivated to take small profits.
#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
As of September 6, Bitcoin’s exchange balance was 2,304,401. But at publication time, the amount had surged to 2,308,388, according to data tracked by Glassnode.
The notable increase in exchange balances came in the lead-up to and after the favorable federal ruling for Grayscale. On August 29, a judge declared that the U.S. Securities and Exchange Commission did not provide a consistent justification for rejecting Grayscale’s bid to convert its flagship Bitcoin trust into an exchange-traded fund (ETF). The verdict, perceived as a victory for the crypto community by pundits, fuelled hopes of the potential arrival of a spot BTC ETF in the United States.
BTC Ready For Deep Correction?
The perspective on the increase of BTC held on exchanges emanates from the idea that when traders deposit their coins, it signals a bearish sentiment. In other words, an uptick in exchange inflows is often seen as a harbinger of a selloff.
Meanwhile, BTC spiked to a $26,400 high a few hours ago, only to reverse the bullish move and reverse all its gains shortly after. The premier cryptocurrency was trading for $25,780.23 at press time, according to CoinGecko. The swift pullback would imply that the investors who had sent their coins to exchanges decided to take some chips off the table.
As the tug-of-war between Bitcoin bulls and bears continues, BTC breaking down further can be expected in the near term — but a recovery afterward is firmly on the cards.