BTC Exchange Reserve Plunges to 5-Year Levels as Investor Cohorts Position for Bull Market: Bitfinex

The latest edition of the weekly market report from cryptocurrency exchange Bitfinex revealed that bitcoin (BTC) reserves on centralized exchanges have plunged further to levels last seen in early January 2018.

According to the Bitfinex Alpha Report, only 2.03 million BTC currently sits on exchanges. Bitfinex noticed a correlation between the slump in exchange reserves and increased crypto prices, suggesting that the market may be in for a bull run.

Bitcoin Exchange Reserves Decline

Bitfinex revealed that BTC reserves on exchanges have been on a decline since they hit a peak in March 2020; this was around the time the asset’s price began to rise. The high in reserves tallied with the beginning of a bull market, indicating a possible inverse relationship between BTC’s price and exchange reserves.

As crypto prices increased, exchange reserves continued to decline, implying that the scarcity of BTC on trading platforms may be the force behind the price movement. However, the BTC price dip in November 2021 and the continued decrease in exchange reserves challenged the relationship, showing that investors also tend to hold less BTC on exchanges during bear markets.

Nevertheless, many market indicators show that long-term holders and a large part of the short-term investor cohort are currently in a HODL phase and are positioned to hold their assets for longer periods.

Multiple Investor Cohorts Position for Bull Market

The 12-18-month supply holders are currently in a position to make a profit on some of their holdings, but long-term and short-term holder supply has remained inactive. Bitfinex said it is a sign that investors across multiple cohorts are confident that BTC will not see a massive slump from its current price.

Notably, Bitfinex analysts found that a green October has succeeded the three occasions where BTC ended September on a positive note. October has also been a month where BTC records positive movements regardless of September’s performances.

“Crucially, we’ve closed September in the green, a rare occurrence. Historically, a positive September ushers in a bullish October, and the volatility as well as the futures market metrics all point towards increased volatility and some upside, at least on the higher time frames,” said the analysts.