Bitcoin volume on exchanges drops steadily, a bullish sign?

The steady drop of Bitcoin volume on cryptocurrency exchanges indicate nothing but scarcity in supply, therefore greater demand.

By · Nov 20, 2020 . 5min read

Bitcoin volume on exchanges drops latest news

The volume of Bitcoin on cryptocurrency exchanges has been on a gradual decline year-to-date. Pointed out by Danny Scott, CEO of CoinCorner, a UK based exchange, Bitcoin on exchanges which well had above 2.9 million BTC as at January has now reduced to around 2.4 million.

In his post, Danny published a screenshot of the graph from Glassnode showing the decline in exchange balance in Bitcoin.

Bitcoin held on exchanges drops steadily, a bullish sign?

From the above, one thing is clear; people are withdrawing their Bitcoin from exchanges but not clear where they are moving them to. However, irrespective of where the bitcoins go asides from the cryptocurrency exchanges, the price is up.

Bitcoin hit $17k and crossed that to launch into $18k after two days. Year-to-date, Bitcoin has done at least 155% in ROI. The call for Bitcoin hitting $20k and possibly surpassing seems realistic with the present bullish trend the cryptocurrency is showing.

More importantly, Bitcoin hit $17k with a new all-time high in terms of market cap. As at 2017, when Bitcoin price touched $17k, its market cap was $329 billion. Fast forward to 2020 and with its current market price at $18,594 as at press time; its market cap sits around $344.9 billion. Meanwhile, the overall market cap for cryptocurrencies has now crossed $500 billion. The current total market capitalization for cryptocurrencies is now $521 billion.

Bitcoin drop on cryptocurrency exchange means one thing: Liquidity squeeze.

The Bitcoin cryptocurrency exchange volume drop may also mean one thing, liquidity squeeze. As most people withdraw their BTC holdings from exchanges, there’s lesser volume available for sale. And with the likes of Grayscale, Microstrategy, Fidelity and a few others aggressively stockpiling, supply shortage is imminent.

Square already sells more than twice the volume of all the mined Bitcoins. Grayscale, on the other hand, buys up at least 75% of all the mined Bitcoins in Q3 of 2020. With PayPal now offering Bitcoin sales on its platform, it’s clear these platforms will be needing a constant huge Bitcoin supply to service their customers. What then happens when the available demand exceeds Bitcoin supply? Economic principles suggest only but one thing: Price Increase.

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