An indicator of Bitcoin exchange deposit addresses, compiled by blockchain data analytics firm CryptoQuant, is at its lowest level since 2016, which could indicate a reduction in selling pressure.
The Bitcoin exchange deposit address indicator represents the number of addresses sending incoming transactions to centralized exchanges. According to a recent research report by CryptoQuant, the number of deposit addresses has dropped to 132,100, reaching its lowest level in years. Its analysis said that this multi-year low indicates that fewer investors are selling Bitcoin on spot exchanges, which may mean that selling pressure has decreased.
Julio Moreno, head of research at CryptoQuant, said in an interview with The Block: "Generally speaking, seeing a decrease in deposits to exchanges may represent lower selling pressure because there are fewer Bitcoins available for sale."
Number of Bitcoin deposit addresses on exchanges, source: CryptoQuant
However, Moreno added that when fewer deposits are being made to exchanges, it may not just be a sign that people are less interested in selling their Bitcoin, but it may also mean that there is less overall demand for Bitcoin because there is less of it. of traders deposit money to bet on rising prices. He explained:
"Some traders deposit money into derivatives exchanges to open long positions, betting on rising prices. In this regard, fewer deposits may also mean less demand for Bitcoin."
Another indicator also shows a decrease in the liquid supply of Bitcoin on centralized exchanges month over month. According to data from CryptoQuant, the number of Bitcoins on centralized exchanges has decreased by approximately 470,000 since the beginning of this year, a drop of approximately 15% from January to September. This trend is reducing the liquid supply of Bitcoin and may indicate that investors are withdrawing their Bitcoin as part of a long-term holding strategy.
Bitcoin reserves on exchanges, source: CryptoQuant
