The Bitcoin (BTC) reserves on crypto exchanges are continuing to decline, which indicate that whales and retail investors may be accumulating. According to the data provided by CryptoQuant, the BTC reserves from all exchanges dropped to 2.4 million, which has a value of approximately $25 billion. In comparison, exchanges had approximately 2.8 million BTC in their reserves in October 2019, which was valued at approximately $30 billion. The reserves of crypto exchanges usually go up when investors decide to deposit Bitcoin. Typically, inflows or deposits are regarded as selling pressure as the traders must send their bitcoin to exchanges if they want to sell.

So when there is a downside in inflow at exchanges, it usually means that the appetite of investors to sell BTC is coming down. Another CryptoQuant chart shows the trend of net inflows of BTC into crypto exchanges within the same time frame. In the last two months, the net inflows on exchanges have been in the negative 20,000 BTC level. In recent weeks, there was a sharp decline in net inflows, specifically as BTC rebounded sharply from $10,300 to a value of $10,700. It was reported on September 26th that large whale clusters had happened at $10,407. 

Whale clusters are usually formed when whales start accumulating new BTC and don’t touch any of the new holdings. Clusters are usually an indication that whales have begun to accumulate in a new area. Considering the resilience of Bitcoin above the $10,000 level and the accumulation trend, investors mostly have very little appetite for selling. Due to the combination of this lacking likeliness to sell BTC at the existing prices and the constant accumulation, the pioneer crypto is on track for a strong quarter. Large-scale hacks could also be another major reason behind the steep decline in exchange net flows. 

Most recently, the popular crypto exchange KuCoin was hacked for $150 million as their hot wallets were compromised by the hackers. The data provided by Skew indicates that Bitcoin is on its way to have its second-best quarterly close. The crypto had closed the second quarter at the price of $9,140. In order to achieve its second-best quarterly close, Bitcoin has to stay above the value of $10,600. There are various reasons behind the strong performance of Bitcoin during the third quarter. Most importantly, Bitcoin rallied in tandem with stocks and gold after a stimulus bill was approved by the United States government.

The stimulus kick-started a market-wide recovery and this created a favorable environment for Bitcoin when combined with the reduced and low-interest rates. According to Skew analysts, there is just one more day to go till the end of the quarter and it is beginning to look like BTC’s second-best quarter. Up until the end of the year, there are three macro and fundamental factors that could sway sentiment when it comes to Bitcoin. This includes the weakening U.S. dollar, vaccines, and the possibility of another stimulus package. Meanwhile, the US dollar is continuously weakening against other reserve currencies like the yen. 

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