- Bitcoin balances on exchanges continue to fall and are now at their lowest point since December 2017
- Meanwhile, long-term investors continue to hold and absorb supply
- Coins that haven’t been touched in 10 years now outnumber coins held on exchanges
Last week, we wrote about the outflow of stablecoins from exchanges, but the current balance is the lowest since October 2021, with 45% of total exchange stablecoin balances dropping in the last four months. It’s leaking.
However, excess liquidity is not unique to stablecoins. The world’s largest cryptocurrency is also seeing money flow out. Only 11.8% of the total Bitcoin Supply is now on exchanges, the lowest since December 2017.
Remember, December 2017 was the peak of the last bull market. Bitcoin rose within $20,000 before free-falling into a two-year bear market that devastated the entire industry.
Bitcoin exchange reserves have only gone one way since January 2020. This suggests an imbalance in demand and supply that so many Bitcoin truists advocate, with much boasting of his hard supply of Bitcoin, his cap of 21 million coins. .
They argue that if demand continues to grow, prices will only rise because supply can’t keep up.
At the heart of this paper is the resilience of long-term holders to keep a firm grip on Bitcoin. And when assessing whether they have, the answer is overwhelmingly yes.
The chart below shows long-term holders against total exchange balance. In November 2022, the number of Bitcoins last active over a decade ago will overtake the number of Bitcoins on exchanges.
Of course, some of these long-term holders become lost coins when the owner dies or loses their private key.
But the stats are still interesting and speak to Bitcoin’s (very) early investor cohort. Don’t forget to include the presumed anonymous Satoshi Nakamoto.
Below is a chart showing the current portion of the Bitcoin supply split by holding time and compared to the exchange balance.
This result is interesting, given that over the past three years, Bitcoin has peaked at around $70,000 during the pandemic, followed by a bone-crushing drop through 2022, when it plummeted to $15,000. And even more so.
We are definitely bullish when it comes to Bitcoin’s long-term trajectory. Of course, it all depends on whether the demand for additional Bitcoin holds up.
In that sense, last year was a big blow. Not only has capital flowed out of the sector at an alarming rate, but a number of high-profile scandals (LUNA, Celsius, FTX, etc.) have rocked the sector. There are concerns that these episodes will discredit the cryptocurrency space and stymie demand for bitcoin on the intuitive side. Have people put off moving to the space?
Hard to say. But when looking at long-term holders, their confidence looks unwavering.