Bitcoin foreign exchange reserves are a good way to gauge investor sentiment in the market. It can show when investors are ready to sell, which means they believe the asset has reached an overvalued point. Likewise, it can show when investors stick to their bags and expect the price of digital assets to rise. The latter has become the norm for four months.
Since August, Bitcoin foreign exchange reserves have been plummeting, and there is no sign of stopping. This shows that investors are positive about the future of the asset, so they are reluctant to give up their holdings in the market. With November and the price of BTC skyrocketing, as foreign exchange reserves reach historical lows, it has not really changed its course of action.
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Bitcoin exchange reserves
recent Glassnode report It has been shown that the supply of centralized exchanges will continue to plummet in the fourth quarter of 2021. As investors withdraw their holdings on exchanges for safekeeping in private and cold storage, daily withdrawals are increasing. The report shows that the daily withdrawal amount has reached 5,000 bitcoins, an increase from the previous week.
This shows that the market is in the stage of “smart capital accumulation”. At this stage, investors buy as many assets as possible, and then consolidate their holdings to wait for a better price. Investors did not dump all their assets to wait for the bear market, but sold Bitcoin just for strategic profit.
BTC falls to $63k | Source: BTCUSD on TradingView.com
Although the price of BTC hit a record high, demand is still rising. Coins leaving the exchange at an alarming rate have caused tight supply, which is likely to cause the value of digital assets to rise.
But one thing to remember is that the market is about to end this phase. Once passed, the price of BTC is expected to record some downside, but it will not be enough to keep the market down for too long.
Diamond hands dominate
The decline in Bitcoin foreign exchange reserves indicates that market sentiment has become mainstream. BTC investors postponed the sale of assets to wait for better market conditions, which runs counter to the previous bear market trend. Since the outflow of funds from the exchange continues even after the BTC reaches the new ATH of $69,000, the expectation that investors will sell their holdings at new historical highs has no practical meaning.
The new Bitcoin wallet balance is also rising rapidly. Glassnode pointed out that the number of BTC sent to newly established wallets has climbed, and the number of transactions involving these newly established wallets is 516,914. An increase of 72% in three months.
Market sentiment is still in the area of greed, indicating that there is buying pressure in the market. This situation is expected to continue until at least December. At that time, market analysts speculate that the price of the digital asset will reach a high of $100,000.
Featured image from Bitcoin News, chart from TradingView.com