The balance of bitcoin on major exchanges has hit its lowest levels since November 2018. Yet unlike that time, when bitcoin was in the depths of the crypto winter, some see this current spate of low bitcoin balances on exchanges as a sign that a new generation of investors is putting its money in it for the long term.
The last time bitcoin balances on exchanges were at this low a point was in November 2018, according to data from Glassnode. A hard fork on Bitcoin Cash that month may have also caused the declining bitcoin balances on exchanges since some owners were moving their bitcoins to private wallets in order to claim the new tokens from the fork. Bitcoin then continued its bearish trend into the beginning of 2019, before it recovered in April of that year.
Long-term holders as a possible reason
Low bitcoin balances on centralized exchanges do not necessarily imply a bearish market trend. In fact, it could reflect a bullish view from bitcoin holders, as they move to longer-term holding strategies, such as cold wallets, Glassnode tweeted back on April 14.
That may be the case with this most recent drop in balances, according to Mike Alfred, CEO of Digital Assets Data.
“There’s no reason to sell now when you have large corporate treasuries like MicroStrategy buying the asset now,” Alfred told CoinDesk in a phone interview. “Why would you be selling when you’re at the beginning of a wave of potential corporate treasuries and institutional investors coming in?”
South Korea-based data provider CryptoQuant also captured the declining bitcoin balances on exchanges. According to the company’s CEO, Ki Young Ju, this means there are fewer bitcoin holders who could sell their bitcoins on exchanges, avoiding a possible major market correction.
However, this decline hasn’t…