The last 8-year low seen in cryptocurrency exchanges has brought hopes of selling pressure on Bitcoin back to the agenda.
The number of deposit addresses on Bitcoin exchanges has fallen to its lowest level since 2016, which was interpreted as a sign that selling pressure has decreased.
According to a research note published by CryptoQuant, the number of addresses transferring Bitcoin to exchanges has dropped to 132,100.
This metric shows the number of addresses making transactions on spot exchanges, and according to the analysis, these levels being too low indicated that investors were selling less Bitcoin, thus reducing selling pressure.
“Generally speaking, less Bitcoin deposited on exchanges indicates that selling pressure may be decreasing because there is less Bitcoin to sell,” Julio Moreno, Head of Research at CryptoQuant, told The Block.
However, Moreno stated that less Bitcoin deposited on exchanges not only means that investors are less likely to sell, but also that overall demand for Bitcoin may have decreased:
Some investors invest funds in derivatives exchanges to open long positions to bet on price increases. In this context, low deposits may also indicate a decreasing demand for Bitcoin.
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