Recently, the analytics platform Glassnode commented on the decline of Bitcoin balances on exchanges, offering fresh perspectives on market supply and demand.
Falling Bitcoin Balances on Exchanges
The percentage of Bitcoin on exchanges has fallen below 15% for the first time since 2018. Some analysts interpret this as a possible supply shock, considering the increasing interest from institutional investors using ETFs.
However, the decline in BTC balances on exchanges does not always lead to straightforward conclusions regarding supply shocks. It is crucial to consider more profound market factors.
Glassnode Observations
Glassnode labeled the idea that dropping BTC balances on exchanges equate to a supply shock as a "meme." "This does not mean that there aren't real supply constraints creating pressure beneath the surface."
They point out that long-term holders are absorbing more BTC than miners issue, which builds pressure in the market.
Bitcoin Price Dynamics
Bitcoin hit a new all-time high of $118,909, capping a four-day rally. This triggered significant short liquidations, amounting to over $1.15 billion in one day. The price increase was supported not only by falling balances but also by positive movements in tech stocks and the recent Federal Reserve meeting minutes.
The overall picture shows that while a decline in BTC on exchanges may signal potential changes, the true market conditions and demand dynamics can be more complex than assumed.
