- Supply on centralized exchanges remains depleted despite an increase in Bitcoin network activity.
- Bulls might need to keep a cool head as 30-day SMA addresses had not finalized surpassing the 365-day SMA.
The dishonesty of FTX, accompanied by the havoc experienced in 2022, led many Bitcoin [BTC] holders to switch to self-custody. However, other unaffected exchanges were quick to respond in the bid to gain back investors’ trust. Led by Binance [BNB], exchanges with millions of users followed through with the Proof-of-Reserves (PoR) system.
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Will exchange supply ever return to normal?
Despite attempts, the action has failed to yield significant results. According to an 18 January Santiment update, BTC’s supply in the last 365 days dropped from 11.85% to 6.65%. This data was coined from the supply activities of the top six exchanges, with Kraken being the most affected.
The metric condition means that holders of the king coin had not exited their position on the safety of their assets being in their own hands. But with BTC putting up an extraordinary performance in the last two weeks, shouldn’t exchanges get more supply?
However, a lot of factors could be at play besides the crash of the Sam Bankman- Fried (SBF)-led exchange. Recently, Gemini has had its own share of troubles. Although in different circumstances, the issues plaguing Gemini also have the tendency to negatively affect its users. Hence, this was another valid reason for BTC holders to overlook non-custodial platforms.
On gauging the supply outside of exchanges, Santiment revealed that it has been on a non-stop increase. At the time of writing, it was 18.1 million, as BTC traded at $21,200.
BTC is back, but it could be better
Moreso, BTC’s trend helped change the fortunes of some investors affected by the 2022 drawdown. This was because Bitcoin was back above the realized price. Hence, this ensured that the average BTC holder had their assets above the reds.
The 2022-23 bear cycle has thus far spent 179-days trading below it, making it the second longest to date.
Read full analysis here: pic.twitter.com/26emkMQUj1
— _Checkɱate 🔑⚡🌋☢️🛢️ (@_Checkmatey_) January 16, 2023
Realistic or not, here’s BTC’s market cap in ETH’s terms
In addition, it might still be difficult for the BTC uptick to contribute to an increase in exchange supply. This assertion was due to Glassnode’s report showing that it was not yet a full-blown bull market. Instead, the possibility of exiting the reds was in progress.
According to the report, the 30-day SMA of new addresses has only surpassed the 365-day SMA for a month. To confirm the bullish trait, the former must have outpaced the latter by a minimum of 60 days. But since that was not the case, the upturn had a chance of being a false move. However, the 30-day sustenance signaled a push in network growth and activity.