Bitcoin (BTC) balances held on exchanges continued to decline, reaching a low of 13 months 2 days ago. Meanwhile, a blockchain analyst suggested that investors should be careful when interpreting the data on-chain.
The new drop in Bitcoin maintained in the exchanges was informed by blockchain analytics firm Glassnode, who said on Twitter a couple of days ago that the 13-month low of approximately 2.62 million BTC on the exchanges is one step lower since June 30, which saw 2.63 million BTC on the exchanges.
As previously reported, currency balances have been on the decline for most of 2020. Meanwhile, various theories have been discussed as the reason for staying away from exchanges, with some insiders pointing to OTC (OTC). ), while others have said that an increase in bitcoin's whale population shows that big owners prefer to take full control of their own currencies.
And although 2020 has seen a decline in bitcoin exchange balances, the downtrend is still a relatively new phenomenon for bitcoin, which can be seen by moving away on the longer-term chart until 2017. Since then, currency balances have been more or less on a continued bullish trend, with relatively minor pullbacks along the way.
Meanwhile, Rafael Schultze-Kraft, Chief Technology Officer (CTO) at Glassnode, suggested in a recent podcast with Stephan Livera that chain data should not necessarily be taken literally, as it is "very difficult" to estimate things like People accounts are hodling bitcoin.
"This is a question that has been very difficult to answer because the approach so far is simply to look at the directions and added that the problem is that a user can control more than one direction.
And there are also addresses that have funds from multiple users. Think of a swap direction, for example, ”explained the Glassnode CTO.
Furthermore, Schultze-Kraft also supported the idea that the reduction in exchange balances is driven by the whales that remove their currencies from the exchanges, saying that the growth in the number of whales is “essentially inversely related to the amount of BTC that is withdrawn from the exchanges ”.
However, the CTO also cautioned that explaining this is not necessarily as simple as simply saying that the whales are learning how to do self-custody, saying that it is probably "too easy" to narrow it down to that.
"At least to some extent, withdrawing funds from the exchanges is potentially a real confidence setup that they know they will hold their currencies for a long amount of time, you know, potentially anticipating a bull market."