Bitcoin exchange holdings drop to a multi-year low, according to a report

Bitcoin reserves on centralized exchanges such as Binance and Coinbase have recently dropped to their lowest levels in years, signaling growing bullish sentiment within the crypto market. According to CryptoQuant data, over 171,000 Bitcoin have been withdrawn from leading exchanges since Donald Trump’s victory in the 2020 U.S. presidential election. These withdrawals reflect a broader trend of Bitcoin leaving exchanges, which is often interpreted as investors moving their holdings to long-term storage rather than selling or trading them. This pattern suggests a shift toward a more buy-and-hold strategy for many Bitcoin holders.

The decline in Bitcoin exchange reserves has been ongoing since the 2021 market peak, reinforcing the idea that many investors have strong conviction in Bitcoin’s future despite the market’s volatility in 2022 and 2023. By October 2021, Bitcoin reserves on exchanges were recorded at approximately 3.2 million BTC, but this number has dropped to 2.46 million BTC at the time of writing, according to CryptoQuant. This steady reduction in reserves reflects a growing belief in Bitcoin as a long-term store of value.

Further analysis by Glassnode supports this trend, showing an increase in the illiquid supply of Bitcoin, which tracks the amount of BTC held by long-term investors. In the past 30 days alone, 185,000 BTC were added to this illiquid supply metric, further indicating that investors are opting to hold their Bitcoin rather than trade it.

Currently, about 75% of Bitcoin’s total supply, which amounts to roughly 14.8 million BTC, has been inactive since early November. This long-term holding behavior is expected to continue into 2025, especially as Bitcoin’s adoption continues to rise, driven by factors such as Trump’s crypto-friendly policies and overall increasing global interest in cryptocurrencies.

Bitcoin’s price surged to a $99,600 peak shortly after Trump’s re-election, reflecting optimism in the crypto market. However, on December 3, both Bitcoin and the broader cryptocurrency market experienced a price correction. This was partially triggered by political uncertainty in South Korea and profit-taking among investors who rotated funds into altcoins like Ripple (XRP). Despite this short-term correction, experts like Thomas Lee, Chief Investment Officer at Fundstrat Capital, predict that Bitcoin will experience a supply shock, potentially pushing the price above $100,000 before the end of 2024.

In summary, the ongoing decline in Bitcoin reserves on centralized exchanges suggests that many investors are holding their positions with a long-term view, contributing to an overall bullish market sentiment. The combination of a shrinking supply on exchanges and increased adoption could set the stage for further price increases, with predictions pointing toward a potential $100,000+ price target in the near future.