Bitrabo Editorial
Recent on-chain data indicates a consistent decrease in Bitcoin addresses making deposits to exchanges, which may signal a positive outlook for its price.
Lowest Level of Bitcoin Exchange Deposits Since 2016
An analyst from CryptoQuant highlighted in a recent post that the metric for Bitcoin Exchange Depositing Addresses has dropped significantly. This metric tracks the unique addresses that are involved in inflow transactions to exchanges.
A high level of this metric typically indicates that numerous users are transferring funds to centralized exchange wallets, often with the intent to sell, which can negatively affect the asset’s price.
Conversely, a low metric indicates that fewer investors are choosing to deposit their Bitcoin into exchanges, suggesting a potentially bullish trend.
The following chart illustrates the trend of Bitcoin Exchange Depositing Addresses over recent years:
The graph highlights a downward trend in Bitcoin Exchange Depositing Addresses since late 2021, indicating reduced user engagement with these platforms.
This metric experienced a temporary increase during the price rally that led to a new all-time high (ATH) earlier this year, but has since returned to its descending path as the market consolidated.
Moreover, this recent decline has been sharper than previous trends, suggesting a significant decrease in selling activity via exchanges, which could be favorable for Bitcoin’s price.
Additionally, the new downtrend of exchange deposits may also be linked to the introduction of spot exchange-traded funds (ETFs). These ETFs were approved by the US Securities and Exchange Commission (SEC) earlier this year and have continued to gain traction.
Spot ETFs offer a more traditional method of gaining exposure to Bitcoin, appealing to investors unfamiliar with cryptocurrency wallets and exchanges. Consequently, some may have opted to invest in ETFs instead of using exchanges.
This shift could have been obscured by the initial excitement during early market rallies. However, as this enthusiasm has waned, it has become clear that traditional exchanges may be losing importance in the Bitcoin landscape.
Current BTC Price
Currently, Bitcoin is trading around $58,000, reflecting an increase of over 2% in the past week.