According to data from CryptoQuant, the amount of Bitcoin (BTC) that is being held on crypto exchanges has dropped from 2.8 million Bitcoins ($30 billion) in March to 2.4 million Bitcoins ($25.7 billion) currently, and this strongly suggests that Bitcoin HODLING has been drastically increasing. Further, the amount of Bitcoins being held on exchanges continues to rapidly drop, and this is a bullish sign for the crypto market.
Essentially, when people are trading or selling Bitcoin, they keep it on an exchange, and the exchange reserves are higher. On the other hand, when people are planning on HODLING Bitcoin for the long term, they withdraw it from the exchange and put it into a highly secure personal wallet.
Therefore, when exchange reserves drop it is a strong indicator that investors are HODLING Bitcoins en masse, and keeping their Bitcoins in personal cold storage in anticipation that Bitcoin’s price will rise significantly over the coming months and years.
Likewise, the fact that the amount of Bitcoins being held on exchanges has dropped by 400,000 Bitcoins ($4.3 billion) is a strongly bullish indicator, since such a significant amount of Bitcoins being moved into long term storage decreases the market supply of Bitcoin, and according to the law of supply and demand this leads to an increased Bitcoin price. Indeed, since March the price of Bitcoin has increased from around $4,000 to over $10,000.
On a final note, it will be important to watch if this trend continues, since if Bitcoins continue to be moved off exchanges en masse, it could be enough of a force to push Bitcoin through it’s long term resistance levels at $12,000 and $14,000, and ultimately it could lead to Bitcoin challenging the all-time high of $20,000. Basically, traders should monitor this metric, since it is a solid indicator of which way the market will go, and at this point this indicator is hinting that Bitcoin is getting more bullish.