Bitcoin exchange reserves have reached their lowest levels in years, marked by substantial withdrawals from leading cryptocurrency platforms such as Binance and Coinbase. Since the U.S. presidential election in November 2024, more than 171,000 Bitcoins have been transferred away from these platforms, indicating a notable change in investor behaviour. The trend of declining exchange reserves, which commenced in 2021, highlights an increasing confidence in Bitcoin as a long-term investment, even amid market volatility. As of October 2021, exchange reserves were recorded at 3.2 million BTC. However, by December 2024, this figure had decreased to 2.46 million BTC.
Data from Glassnode reveals a notable decline in Bitcoin on exchanges, coinciding with a rise in the quantity retained by long-term investors. Over the past month, Glassnode has indicated that 185,000 BTC have been added to the illiquid supply. This increase brings the total Bitcoin held by long-term investors to 14.8 million, which accounts for approximately 75% of the current circulating supply. This indicates that a significant amount of Bitcoin is being retained instead of exchanged, underscoring that numerous investors regard it as a store of value rather than a vehicle for short-term trading.
In a surprising turn of events, Bitcoin’s price has experienced a decline of approximately 2%, falling beneath the $94,000 threshold, even as supply continues to tighten. The recent decline triggered widespread liquidations throughout the market, resulting in $578.6 million in positions being liquidated within one day. Out of this total, $90 million originated from long positions in Bitcoin, suggesting that many traders were wagering on the cryptocurrency’s sustained rise. Despite the recent price correction, market sentiment exhibits strength, as experts forecast a possible increase in Bitcoin’s value by year-end.
Following President Trump’s re-election, Bitcoin’s price experienced a significant increase, reaching $99,600. Analysts suggest that the cryptocurrency may exceed the $100,000 mark before the end of 2024, fuelled by a possible supply shock. The ongoing trend of Bitcoin being withdrawn from exchanges is leading to a tightening of its available supply, which may contribute to future price increases. The outlook for Bitcoin appears optimistic, particularly with the new administration’s expected implementation of crypto-friendly policies.
The decline in Bitcoin reserves on exchanges suggests a growing trend among investors to retain their holdings for the long term. The current decrease in supply and increasing acceptance of Bitcoin indicate that the cryptocurrency may experience substantial price surges in the coming months, even in the face of short-term fluctuations.