The latest data from on-chain analytics firm Glassnode reveals that the amount of Bitcoin (BTC) held on exchanges has reached its lowest level since the 2017 all-time high. Currently, less than 12% of the BTC supply resides in exchange wallets. This trend has been evident since late April, marking a reversion to the long-term trend of coins leaving exchanges. As of July 10th, only 11.59% of the available BTC supply is stored in known exchange wallets, the lowest it has been since mid-December 2017 when Bitcoin reached its previous all-time high of $20,000.
The milestone of decreasing exchange balances has not gone unnoticed by industry experts. William Clemente, co-founder of crypto analysis firm Reflexivity Research, highlights that only 11.5% of the Bitcoin supply is left on exchanges, the lowest figure seen in over 5 years. This suggests a growing trend of investors opting to store their BTC in their personal wallets rather than on exchanges. In terms of specific exchanges, BTC balances on platforms like Coinbase have more than halved since the March 2020 cross-market crash.
Joe Burnett, head analyst at mining firm Blockware, emphasizes that the exchanges are experiencing a depletion of Bitcoin. He believes that this depletion indicates that Bitcoin is on the verge of true price discovery, suggesting that there may be a significant surge in the BTC price in the near future. The declining supply of Bitcoin on exchanges has also fueled expectations of a price squeeze, as it coincides with increasing buyer demand and the potential approval of a Bitcoin spot price exchange-traded fund (ETF) in the United States. Some argue that advancements in artificial intelligence (AI) will further enhance this effect over time.
While exchange balances continue to decrease, the number of Bitcoin whale entities, which are individuals or entities with substantial BTC holdings outside of exchanges, has been on the rise. Since late April, approximately 40 new whales have emerged, and on July 7th, their numbers reached the highest level since the FTX meltdown in November of last year. This surge in new whales suggests a growing interest from high-net-worth individuals and institutions in Bitcoin as a long-term investment and store of value.
Interestingly, one exception to the overall trend of decreasing exchange balances is mining pool Poolin. This mining pool has been consistently sending large amounts of BTC to Binance, indicating that some miners are preferring to exchange their newly minted BTC for other cryptocurrencies or fiat currencies rather than storing it in their own wallets.
The decline in Bitcoin exchange balances to levels not seen since the 2017 all-time high indicates a shift in investor behavior towards securing their BTC in personal wallets. This trend aligns with expectations of a BTC price squeeze and the potential approval of a Bitcoin ETF. As new whales enter the market and mining pool activity diverges, the future of Bitcoin as a global asset class becomes increasingly intriguing.
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