Recent on-chain data indicates that Bitcoin addresses making deposits to exchanges have been on a downward trend lately, which could signal a bullish outlook for the price.
Bitcoin Exchange Depositing Addresses Reach Lowest Levels Since 2016
An analyst discussed in a CryptoQuant Quicktake post that the metric for Bitcoin Exchange Depositing Addresses has significantly dropped. This metric tracks the number of unique addresses conducting inflow transactions to exchanges.
A high value of this metric indicates that many users are sending transactions to wallets linked to centralized exchanges. Since one common reason for depositing to these platforms is to sell assets, this trend could be interpreted as bearish for Bitcoin.
Conversely, a low metric suggests fewer investors are willing to deposit their coins into exchanges, which could be a positive indicator for price movements.
Here’s a chart illustrating the trend in Bitcoin Exchange Depositing Addresses over the last several years:
The metric has shown a recent decline | Source: CryptoQuant
The above graph reveals that Bitcoin Exchange Depositing Addresses have decreased consistently since late 2021, indicating a diminished interest in utilizing these exchanges.
The indicator briefly went against its downward trend during the rise to a new all-time high (ATH) earlier this year as the surge garnered attention.
However, following the peak and subsequent consolidation of the asset, Exchange Depositing Addresses have resumed their decline. This decline has been notably sharper than before.
Therefore, it seems that the inclination to sell through exchanges may have significantly decreased among investors, which could likely be bullish for Bitcoin’s price.
Additionally, this sharp downward trend may also be influenced by the introduction of spot exchange-traded funds (ETFs). At the beginning of this year, the US Securities and Exchange Commission (SEC) approved spot ETFs, which have gained traction.
Spot ETFs offer a familiar way for traditional investors to gain exposure to Bitcoin. As a result, many investors who were previously unfamiliar with cryptocurrency wallets and exchanges may have opted for these ETFs.
This shift may have been obscured by the early-year rally, during which activity related to Bitcoin spiked. However, as the excitement has waned, it’s become clear that exchanges are losing significance within the Bitcoin ecosystem.
Current BTC Price
As of this writing, Bitcoin is trading at approximately $58,000, reflecting an increase of over 2% in the past week.
The asset's price appears to have decreased over the last day | Source: BTCUSD on TradingView
Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com