Bitcoin Supply Shock: The Great Exchange Hoax! 💰😂

Hold onto your wallets, folks! The on-chain analytics firm Glassnode has just dropped a bombshell: that popular myth about the decline of Bitcoin exchange supply? Not so much! 🎉

Available Bitcoin Supply Hasn’t Actually Dropped Much

In its latest weekly report, Glassnode has tackled a misconception that’s as popular as a bad stand-up comedian in the Bitcoin community. Apparently, everyone thinks the Balance on Exchanges is taking a nosedive this cycle. Spoiler alert: it’s not! 🤷‍♂️

The “Balance on Exchanges” is just a fancy term for how much Bitcoin is lounging around in the wallets of all those centralized exchanges. Think of it as Bitcoin’s version of a couch potato! 🥔

Now, why do investors deposit their precious coins into exchanges? Well, it’s usually to sell them! So, when the Balance on Exchanges goes up, it’s like saying, “Hey, I’m ready to part with my tokens!” And when it goes down? Well, that’s bullish, baby! 📈

Now, feast your eyes on this chart for the Bitcoin Balance on Exchanges shared by our friends at Glassnode:

Bitcoin Balance on Exchanges Chart

As you can see, the Bitcoin Balance on Exchanges was lounging at 3.1 million BTC in July 2024, but today it’s down to a mere 2.74 million BTC. Cue the dramatic music! 🎶 This has led many to believe we’re facing a ‘supply shock’—but hold your horses!

Glassnode has a different take on this. They say:

While many interpret this as a supply shock caused by a mass exodus of coins, we believe the majority of this decline is just coins shuffling into ETF wallets managed by custodians like Coinbase. It’s like a game of musical chairs, but with Bitcoin! 🎵

Speaking of ETFs, these nifty investment vehicles were introduced in the US last year. They’re like the new kids on the block, offering a familiar way for traditional investors to get their Bitcoin fix. And guess what? They’re controlling a hefty chunk of the supply now! 💼

“After the SEC approved Bitcoin Spot ETFs in January 2024, eight of eleven spot ETFs picked Coinbase as their custodian,” notes Glassnode. “As demand for ETF products picked up, a significant migration of coins from exchange wallets into Coinbase’s institutional custodian wallets occurred.” Talk about a Bitcoin road trip! 🚗💨

Check out this chart showing the trend in the holdings of these spot ETFs:

Spot ETFs Holdings Trend Chart

And here’s where it gets interesting! If we combine the Bitcoin holdings of the spot ETFs with those of the exchanges, we get a whole new picture:

Combined Holdings Chart

From the graph, it’s clear that this combined indicator is sitting at a cozy 3.04 million BTC right now. It’s like the market is saying, “Hey, we’re right back where we started in 2024!” 🕰️

So, Glassnode concludes that the apparent decline in the Bitcoin Balance on Exchanges is more about a shift in market structure than a decrease in the available sell supply. It’s like rearranging the deck chairs on the Titanic—only this time, the ship isn’t sinking! 🚢

BTC Price

In other news, Bitcoin has made a comeback of about 3% in the past day, strutting its stuff beyond $105,000. Look at it

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2025-01-30 22:44