On-chain analysis: BTC balances on exchanges continue to decline

Consider Bitcoin (BTC) on-chain indices, especially those related to exchanges (CEX) and institutional investors.

After a phase of slight increases in May, the BTC balances on the stock exchanges fell again and reached an annual low on September 29th.

BTC credit on exchanges

The total number of BTC held on exchange wallets has been gradually decreasing since March 2020 when it hit an all-time high of 3,118,057 BTC (black arrow).

The decline resulted in a low of 2,494,840 BTC on April 11. This means that during this time, investors have steadily shifted BTC off the exchanges.

While the amount of BTC on the exchanges rose after falling in May, it fell again, hitting a lower low of 2,452,843 on September 29.

The source: Glass knot

This can be better visualized by looking closely at the movement since May. It’s a bullish indicator as the number of BTC on the exchange continues to decline in July.

The source: Glass knot

Trend signals

If one looks at the change in net positions on the stock exchanges, we see that the net inflow has currently developed from positive (black circle) to negative.

As can be seen in 2017-2020, the positive development of net positions was a major factor in the bear market. This happens because investors are quick to take profits and sell their coins.

However, a negative net position is usually a sign of an accumulation that occurs during an uptrend.

The source: Glass knot

In addition, the funding rate is close to zero, which does not offer a clear outlook on developments. In times of euphoria or panic, when the price of BTC rises / falls rapidly in a short period of time, the financing rates often rise / fall significantly.

The source: Glass knot

Conclude

Today’s on-chain analysis shows that the amount of BTC on the exchanges (CEX) continues to decline, although Bitcoin is in a correction. This means that investors are using this correction to accumulate.

This view is also supported by the net position on the exchanges when the indicator has turned negative.

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