In a startling revelation in the cryptocurrency market, the latest data retrieved by Finbold from the behavior analytics platform Santiment on August 24 paints a vivid picture of Bitcoin’s (BTC) supply dynamics. 

The figures highlight a significant development, as only 5.8% of the total Bitcoin supply is presently held on exchanges. This marks a historic low for the pioneer cryptocurrency’s top market cap asset, a level not witnessed since the heady days of December 17, 2017.

BTC supply on exchanges. Source: Santiment

This intriguing trend comes as the culmination of various factors converging within the cryptocurrency ecosystem. One driving force behind this decline in exchange-held Bitcoin is the growing shift towards long-term holding strategies among investors.

As confidence in Bitcoin’s potential to act as a robust store of value strengthens, individuals are opting to move their holdings into private wallets, reducing the availability of Bitcoin for trading on exchanges.

Furthermore, the recent surge in Bitcoin whale activity adds another layer of complexity to this evolving narrative. The data underscores the sustained interest of high-net-worth individuals and institutional players in Bitcoin, with transactions exceeding $100,000 in value averaging a remarkable 57,400 per week. 

This surge in whale transactions implies a deepening commitment to the cryptocurrency, as well as a strong desire to secure substantial positions off exchange platforms.

What does it mean for BTC?

The repercussions of this trend extend far beyond mere statistics. The dwindling supply of Bitcoin on exchanges signifies a potential tightening of liquidity in the market. 

As the availability of Bitcoin for trading diminishes, supply-demand dynamics come into play, often exerting upward pressure on the asset’s price. This confluence of factors could potentially set the stage for another price rally reminiscent of historic bull runs that have left indelible marks on the cryptocurrency landscape.

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The observed decline in Bitcoin supply on exchanges to levels not witnessed in nearly 6 years is a significant development that hints at the maturation of the cryptocurrency market. 

The timing of this latest data coincides with a challenging period for the leading crypto exchange, Binance. The exchange is currently grappling with regulatory challenges, and its operations have been further complicated by the temporary suspension of withdrawals and deposits within the EU. 

These developments have raised concerns among investors, particularly as a noteworthy event unfolded – Bitcoin whales executing a rapid withdrawal of over 5,000 BTC from the Binance platform within a mere one-minute timeframe.

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Dennis is a business and financial writer, who had spent almost his entire life independently reporting on different business ventures with major impact on the US and global economy. Dennis places a special focus on examining tech stocks, biotech stocks all while investing a great part of his early hours to researching and writing on the companies in the US markets. Dennis has 15+ years of experience in financial markets.