Bitcoin exchange inventory is a great way to measure market sentiment towards the cryptocurrency. Past inflows into stock exchanges usually indicated strong selling sentiment. They come from investors who want to cash out the profits they have made. This is usually the case during bull markets when prices are rising. But for the first time, Bitcoin exchanges’ inventories are falling despite the fact that the price of the digital asset is rising.
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Numbers show that the Bitcoin exchange level is not rising in line with the price. If anything, the opposite appears to be the case. The number of bitcoins leaving exchanges has risen sharply lately. In the last 30 days alone, over 100,000 bitcoins have flowed out of the exchanges. Representing one of the sharpest decline in foreign exchange reserves on the market.
BTC exchange reserves experience sharp downtrend | Source: Twitter
Investors pile up
The number represents decreased supply in the market, and the outflows suggest that demand for the digital asset is increasing. Investors keep their coins instead of selling the coins on exchanges. This has put the market under strong buying pressure. The decreased supply will inadvertently lead to an increase in the price of the digital asset.
BTC exchange reserves fall for the first time in a bull market | Source: Twitter
These patterns show a peculiar accumulation pattern in the market. Bitcoin accumulation is usually highest when the market is in a bear market. A prolonged bear market like the one following the 2017-2018 bull market would result in investors hoarding coins waiting for the next bull market. Currently, however, the accumulation patterns show that investors are hoarding coins even in a bull market.
Sentiment generally remains positive as the Fear & Greed Index finally turns into greed for the first time in months. Accumulation patterns are now showing a very bullish pattern in the market. Private investors don’t believe the bull market will be over anytime soon, neither do institutional investors.
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As more and more bitcoins are mined, causing a decrease in the number of bitcoins remaining in the market, investors are trying to get their hands on as much of the digital asset as possible. This increased demand has pushed the price up. This resulted in a continuation of the bull market, which had shrunk in half after the asset hit a new all-time high of $ 64,000.
Bitcoin rises with accumulation
Bitcoin’s price rose well into August. The price hit $ 45,000 for the first time in two months, suggesting a continuation of the bull market. For eight consecutive green days, BTC had hit eight green candles, triggering a bull run in the market. At that point, the bulls had taken complete control of the market. Bears had suffered massive losses when the market liquidated over $ 1 billion worth of shorts in a 24 hour period.
BTC price trailing $44K | Source: BTCUSD on TradingView.com
The bulls continued to hold the market. Bitcoin price has seen several drops this week alone. However, the downward movement on the charts was not significant. The price had tested $ 48K this week. It will eventually break back below the $ 44,000 mark if it encounters resistance at that level.
Trailing prices are now in the $ 44,000 range for BTC. Price analysis shows that the level to beat for another rally is $ 46,000 at the current momentum. At the time of this writing, BTC is currently trading at $ 44,470, with a total market cap of $ 835 billion.
Featured image from Bitcoin News, charts from Twitter and TradingView.com