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Bitcoin Holding Sentiment Strongest in Nearly Two Years

The amount of bitcoin held on crypto exchanges is down to a 21-month low, a sign investors are feeling bullish.

Aug 18, 2020 at 11:49 a.m. UTC
Updated Sep 14, 2021 at 9:45 a.m. UTC

Bitcoin exchange reserves have fallen to a 21-month low, a possible sign investors are feeling bullish about the shape of the market.

  • Glassnode data shows the number of bitcoins held in exchange addresses fell by 0.83% to 2,610,278 BTC on Monday, the lowest level since Nov. 24, 2018.
  • Investors tend to move digital assets from their wallets and onto exchanges when they lose confidence in the current price movement so they can easily sell them.
  • In the days leading up to the Black Thursday sell-off, when bitcoin crashed by 40%, exchange balances surged by 2% to a high of 2,947,555 BTC.
  • But bitcoin has since surged to a 13-month high of $12,400 on Monday and is currently up 200% from the $3,867 low it fell to five months ago. 
  • As such, exchange balances are down 1.4% over the past week, and nearly 3% in the last month. Balances were down more than 11% from the March 13 high at press time.

Bitcoin: Balance on Exchanges

  • The price rises come despite bitcoin looking increasingly overbought on the weekly chart relative strength index (RSI) – an indicator that helps traders recognize the signs of overbought and oversold markets.

Bitcoin's weekly relative strength index has crossed above 70.00 - a sign the rally is overdone and a pullback is overdue.

  • eToro analyst Simon Peters told CoinDesk: “Lower BTC spot exchange balance indicates a current holding mentality among investors, I see this as being pretty bullish."

DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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