An interesting shift seems to have taken place in the Bitcoin market as the asset’s reserves on centralized exchanges have fallen to their lowest level since November 2018.

A CryptoQuant analyst named G aah highlighted this development, noting a significant change in the behavior of BTC investors in the crypto space, while also signaling a rather interesting trend for Bitcoin.

Exchange Bitcoin reserves fall to five-year low

According to the analyst, the sharp decline in Bitcoin reserves on exchanges throughout 2024 reflects a shift among market participants toward a long-term holding strategy.

The trend suggests investors are increasingly moving assets to private wallets, reducing the supply available for immediate sale and increasing buying pressure in an already supply-constrained market.

Gah said the behavior points to a shift in broader sentiment, with market participants growing more confident in Bitcoin as a store of value amid a backdrop of “economic uncertainty and rising inflation.”

By moving Bitcoin off exchanges, investors can reduce the likelihood of sudden sell-offs, thereby increasing price stability. However, a reduction in supply on exchanges can also lead to increased volatility, especially if demand continues to grow or remains stable.

That being said, this scenario suggests that the Bitcoin market could be more volatile, but also more resilient, with less selling pressure and long-term holders dominating, which could open up space for new price peaks.

BTC's upward momentum is fading

After hitting an all-time high (ATH) of $93,477 on Wednesday, November 13, BTC has experienced a fairly significant correction and is now down 4% from its peak. So far, the asset has failed to extend its upward momentum and appears to be experiencing more selling.

At the time of writing, Bitcoin is trading below $90,000 and is currently trading at $89,779, down 1.4% over the past day. The price drop has wiped out about $49 billion from its market value as of Wednesday.

As things stand, BTC’s market cap is $1.775 trillion as of today, down nearly 5% from $1.835 trillion two days ago. Bitcoin’s daily trading volume has fallen to below $85 billion from over $100 billion earlier this week.

In addition to affecting its market capitalization and trading volume, BTC’s decline has also had a significant impact on a small number of traders. According to Coinglass, approximately 170,215 traders were liquidated in the past 24 hours alone, bringing the total liquidations in the cryptocurrency market to $510.13 million.