Bitcoin reserves existing on crypto exchanges have reportedly touched exclusive lows for this year. Famous on-chain analytics company CryptoQuant’s analyst disclosed that the trend of the new lows in the exchange-based $BTC reserves could denote a minimized selling pressure, likely resulting in a bullish phase in the case of continuous demand growth.
$BTC reserves on exchanges hit new lows for the year“Therefore, when there is less Bitcoin available on exchanges, there is less liquidity available for immediate sale.” – By @gaah_im Read more https://t.co/rg68joEXMP pic.twitter.com/MsUkjCs7HI
— CryptoQuant.com (@cryptoquant_com) August 29, 2024
$BTC Exchange Reserves Plunge to Latest Lows for the Current Year as Self-Custody Rises
The CryptoQuant analyst going provided the possible reasons behind this dip in exchange reserves. The analyst pointed out a relationship between the dip in the exchange reserves and the self-custody strategies’ growing adoption. According to the analyst, the number of investors who store assets in some private wallets is increasing.
This figure is elevating in comparison with those investors who leave their assets on centralized crypto exchanges. The rapid plunge in $BTC exchange reserves has many implications for the wider crypto market. When exchanges have less $BTC availability, there is less liquidity to conduct immediate sales.
The respective liquidity decline can lead to a supply contraction, where less availability can elevate prices. This can particularly occur in the case of a resilient demand or an increase in it. Such a situation could result in a likely bull market and mirror an overall investor sentiment. In this respect, the investors tend to hold the assets instead of selling them.
Self-Custody Solutions Seem Less Susceptible to Risks Linked to Centralized Entities
The move regarding self-custody makes a key contribution to the minimized exchange reserves of Bitcoin. More and more investors are pursuing additional control over the digital assets. For this purpose, they move toward cold wallets. Such offline solutions for storage are reportedly less vulnerable to hacking as well as the rest of the risks that the centralized entities pose.
