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Bitcoin Liquidity Tightens as Exchange Reserves Decline

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Feb 16, 2022

Three months ago, Bitcoin, the world’s leading cryptocurrency, had reached an all-time high of $69,000. It has declined since then and is now 38% lower, but the amount of BTC held at different exchanges has also reached its lowest value since April 2021. Last year, there had been 2.59 million bitcoin that was held at crypto trading platforms at the end of July. However, the amount of bitcoins held by exchanges today is 2.36 million. This means that from six months ago, the total amount of bitcoin held by exchanges has reduced by almost 8.8%. Current statistics indicate that there is about 2.363 million bitcoin, which is valued at $100 billion.

The overall market capitalization of the world’s first currency is around $809 billion and 12.36% of this value is currently held by centralized exchanges. Even though 2.363 million is still a substantial amount, as noted above, it is about 8.8% less than what it had been half a year ago on July 25th, 2021. Since there is an excessive number of participants in the crypto market and a reduced quantity of bitcoins on exchanges means that the selling pressure will decline in the near future. According to the metrics, the last time that the amount of bitcoin held by exchanges had declined to this low was in April 2021, which is almost ten months ago.

The statistics provided by Chain.info, Etherscan, Peckshield, and Bituniverse show that the highest amount of bitcoin reserves are currently on the Coinbase exchange, as it holds about 853,530 BTC in total. This makes it about 35% of the total value of $100 billion worth of bitcoins that are currently held on all exchanges. The second-largest bitcoin reserves in the list of exchanges can be found on Binance, which has about 339,870 BTC. Calculating on the basis of the latest exchange rates, this puts its bitcoin reserves at a value of $14.5 billion.

The same is also applicable in the case of Ethereum (ETH), which is held on centralized exchanges. According to statistics provided by cryptoquant.com, the amount of ETH held on exchanges currently stands at 17 million, but it has also been declining since May 2021. Last year in May, the total amount of ether that was held at exchanges was around 21.9 million. This marks a drop of about 22.37%, but there is a possibility that the ether that has been transferred from centralized exchanges was moved to decentralized exchanges (dex).

Binance is currently the largest crypto exchange in terms of trading volume and the most active one as well. Its ether reserves contain about 3.59 million Ethereum. Usually, when the reserves of BTC and ETH on exchanges decline, it means that selling pressure is reduced. However, the latest statistics indicate that people have been selling BTC. According to Glassnode data, miner holdings had turned negative on February 5th this year and this is the first in the last two months. Data from cryptoquant.com shows that mining entities currently hold about 1.8 million BTC.

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