Bitcoin and Ethereum Exchange Reserves Continue To Plummet, As Supply Shock Tightens Its Grip

Data shows Bitcoin and Ethereum exchange reserves continue their downtrend as the supply shock tightens its grip.

Bitcoin And Ethereum Exchange Reserves Trend Downwards

As pointed out by a crypto trader in a tweet, both Bitcoin and Ethereum continue to experience a decline in their exchange reserves.

The exchange reserve of an asset is an indicator that shows the number of coins present on wallets of all centralized exchanges.

An increase in the value of the metric means investors are sending more of their assets to exchanges for withdrawing to fiat or for purchasing altcoins. Such a trend could indicate a selling pressure in the market.

On the other hand, a downtrend would imply investors are withdrawing their coins for hodling or for selling through OTC deals.

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Here is a table showing how the value of the exchange reserve has changed in the last 30 days for Bitcoin and Ethereum:

BTC and ETH exchange reserves seem to be going down | Source: ViewBase

As we can see from the above chart, the indicator for both Bitcoin and Ethereum is showing a decline over the last 30 days.

It looks like currently 6.5% of the BTC supply is present in exchange wallets, while the figure is a little higher for ETH, around 15.7%.

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Over the last month, Bitcoin and Ethereum’s exchange reserves have dropped by around 1.2% and 1.5%, respectively.

The BTC And ETH Supply Shock

The current narrative has been that both Bitcoin and Ethereum are undergoing a supply shock, which has only been getting deeper. On-chain data backs the idea, as the exchange reserves have already shown.

Another relevant indicator is the short-term supply, which has declined to levels not seen since 2015. This metric measures the amount of coins that were part of transactions recently. So, the metric would suggest accumulation has been going on.

Usually, supply shocks are bullish for the price of cryptocurrencies. At the time of writing, Bitcoin’s price floats around $48k, up 2% in the last 7 days. Over the past month, the coin has accumulated 2.5% in gains.

Here is a chart highlighting the trend in the price of the crypto over the last five days:

BTC's price declines a bit after a strong move up | Source: BTCUSD on TradingView

As for Ethereum, the coin is currently trading around $3.6k. The crypto’s value is up 3.5% in the last week, while gains for the last month stand at 11%.

The below chart shows the price trend for ETH in the last five days:

ETH has moved up in the last few days | Source: ETHUSD on TradingView

Featured image from Unsplash.com, charts from TradingView.com