Emily Walker
Bitcoin has experienced a significant drop to $95,000 recently, with on-chain data indicating that large investors, or whales, have been actively depositing their holdings to exchanges.
Bitcoin’s Gains from Christmas Have Almost Disappeared
After giving investors hope by nearing the $100,000 threshold during the Christmas rally, Bitcoin has dashed these expectations with a sudden price decline.
The current price of Bitcoin is around $95,700, which is not significantly higher than the $94,100 level seen before the recent surge.
This downturn in Bitcoin’s price aligns with insights from on-chain analysis.
Large Bitcoin Holders Are Increasing Exchange Deposits
Analyst Ali Martinez highlighted in a recent post that there has been a substantial increase in Bitcoin deposits to exchanges this past week. The “Exchange Reserve” metric is crucial here, as it tracks the total Bitcoin held in the wallets of centralized exchanges.
An increase in this metric suggests that holders are making net deposits, which often indicates selling activity, a trend that could negatively impact the asset’s value.
Conversely, a decrease in the Exchange Reserve indicates that outflows are surpassing inflows, suggesting that holders are accumulating rather than selling, which can be a positive sign for price movement.
A chart shared by CryptoQuant illustrates the trends in Bitcoin’s Exchange Reserve over the last few weeks:
The chart indicates that the Exchange Reserve declined during the earlier price rally, reflecting accumulation by investors. However, leading up to and during the Christmas rally, there was a significant increase in deposits. Over the last week, investors added 33,000 BTC to exchanges, valuing around $3.15 billion at current rates.
Most deposits occurred on Christmas Eve, implying that large holders anticipated selling once the price reached a desirable level, which ultimately led to the subsequent price drop.
Future movements in the Bitcoin Exchange Reserve will be crucial to monitor; any shifts could signal that investors view current prices as favorable for buying again.