Bitcoin exchange reserves have fallen to a 21-month low, a possible sign investors are feeling bullish about the shape of the market.
- Glassnode data shows the number of bitcoins held in exchange addresses fell by 0.83% to 2,610,278 BTC on Monday, the lowest level since Nov. 24, 2018.
- Investors tend to move digital assets from their wallets and onto exchanges when they lose confidence in the current price movement so they can easily sell them.
- In the days leading up to the Black Thursday sell-off, when bitcoin crashed by 40%, exchange balances surged by 2% to a high of 2,947,555 BTC.
- But bitcoin has since surged to a 13-month high of $12,400 on Monday and is currently up 200% from the $3,867 low it fell to five months ago.
- As such, exchange balances are down 1.4% over the past week, and nearly 3% in the last month. Balances were down more than 11% from the March 13 high at press time.
- The price rises come despite bitcoin looking increasingly overbought on the weekly chart relative strength index (RSI) – an indicator that helps traders recognize the signs of overbought and oversold markets.
- eToro analyst Simon Peters told CoinDesk: “Lower BTC spot exchange balance indicates a current holding mentality among investors, I see this as being pretty bullish."
See also: First Mover: As Wall Street Goes Topsy-Turvy, Crypto Traders Are Bullish as Ever