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Institutional hold-up? - It's a metric that I've been following for a few months already. This week, 12,485 bitcoins have again disappeared from trading platforms.
12,485 bitcoins disappear in 2 weeks
When I last analyzed this indicator, it wasn't Bitcoin I was talking about, but OmiseGo (OMG). In just a few days, more than 25% of the total supply available on the marketplaces would simply fly away into the wild!
But it was only an epiphenomenon of this metric tracking. No, what interests me most is the amount of bitcoins available on the marketplaces, due to a pronounced downward trend that has been going on for several months already. For the moment, it is clear that the trend is intact. In the last 2 weeks, another 12,485 bitcoins have been withdrawn from circulation:
Almost 300,000 bitcoins withdrawn from exchanges in 2020
In 2020, between the highest and the lowest amount of bitcoins held on exchange platforms, the differential now stands at 298,766 bitcoins. The question that arises then is obviously: is it bearish or is it bullish? It is theoretically bullish for a simple reason. If there is less supply available on exchanges for constant demand, then the price goes up mechanically.
However, you must be very careful with this consideration: in practice, it is more complicated and does not in any way indicate potential volatility. The only behavior that can be deducted from this is that there are probably people with a lot of capital who buy on the spot market, and withdraw bitcoins from offline wallets.
This fiction is a near indication of the fundamental value of Bitcoin which unfortunately does not allow entry at the right time. This population could simply buy the spot market, and cover themselves as they go, to protect themselves from a fall. This practice is called a hedging strategy.
It would thus ultimately have a neutral position, much less bullish than we think. On this assumption in the event of a market fall:
- The value of bitcoins held on wallets is decreasing
- The cover (short position) would gain in value, in proportion to the cover. If the coverage is 100%, then it gains as much as it loses: the position is neutral.
A plethora of graphics on the amount of bitcoins on exchanges
In order to allow you to access a greater granularity on this metric, I offer you in this part an anthology of graphics that I leave you free to study.
Each one measures on 2020 the quantity of bitcoins held on the exchanges. I have distinguished them in 2 categories:
1- Those which make it possible to carry out hedging strategies on the Bitcoin price as mentioned above;
2- Those not allowing it.
The exchanges with a secondary market
- Quantity of bitcoins on BINANCE in 2020
- Quantity of bitcoins on BITMEX in 2020
- Quantity of bitcoins on Bitfinex in 2020
- Quantity of bitcoins on Gemini in 2020
- Quantity of bitcoins on Huobi in 2020
- Quantity of bitcoins on Kraken in 2020
- Quantity of bitcoins on OkEx in 2020
100% spot market exchanges
Some exchanges offer a so-called “margin” function. I believe that it is not really a derivative even if it allows to take advantage of a lever, but more of an underground function specific to the cryptocurrency market very probably little used by institutional investors. When you take a margin position, you position yourself directly on the spot market, unlike a futures contract or options.
- Quantity of bitcoins on Poloniex in 2020
- Quantity of bitcoins on Bitstamp in 2020
- Quantity of bitcoins on Bittrex in 2020
- Quantity of bitcoins on COINBASE in 2020
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