At the core of today’s analysis of Bitcoin and Ethereum is the question of the available supply on the crypto exchanges. To do this, we look at on-chain data from the Swiss company Glassnode.
The supply of available Bitcoin on crypto exchanges is decreasing
The Switzerland-based company Glassnode is one of the best-known providers of on-chain data. A current evaluation from August 19 shows that more and more Bitcoin are being withdrawn from crypto exchanges. A clear net outflow can be seen, so that more BTC flows from exchanges than Bitcoin in turn goes to the exchanges. The result is a reduction in the available supply on the stock exchanges, ergo an increasing scarcity.
The market has transitioned through a number of phases of exchange flow dominance over the last year, with outflow dominance last seen in late 2020. pic.twitter.com/BQLlw06SJr
– glassnode (@glassnode) August 19, 2021
The second passage of the tweet is devoted to the last 12 months and analyzes to what extent similar cycles can be observed. The above graphic from the tweet shows that in the period from September 2020 to the end of November 2020 there was a so-called Outflows Dominance gave. That is, the outgoing rivers outflows compared to the incoming rivers (engl. inflows) dominate. Glassnode describes this phase as the accumulation phase, as investors withdraw Bitcoin from exchanges to other storages and thus accumulate it. In other words: The Bitcoin are not available for sale on the stock exchanges.
Effects on the price of BTC and ETH
As a rule, a negative balance, i.e. outflows dominance, is interpreted as a positive sign for the Bitcoin price. Because, according to the common argument, a lower available supply must lead to a price increase if demand remains the same.
A look at the Bitcoin chart of the past 12 months shows at least that shortly after the last Outflows Dominance last year, the important mark of 20,000 US dollars was exceeded.
In fact, the current withdrawal of Bitcoin is one of the strongest outflows in the history of cryptocurrency. Will Clemente, an analyst at Blockwareteam, suggests one thing current tweet points out that more than 110,000 BTC have flowed from crypto exchanges in the past 30 days alone.
At the same time, an almost identical phenomenon can be observed with Ethereum (ETH). Here too they show current data from Glassnode that the available supply of Ethereum on exchanges has reached an all-time low, while in turn the deposited ETH in Ethereum 2.0 staking reach an all-time high. According to Glassnode, the currently available supply at ETH on exchanges is 13 percent of the supply in circulation (circulating supply). In contrast, 5.7 percent of the available offer is already stored in the ETH 2.0 staking contracts.
In summary, it can be said that the supply available on exchanges is decreasing for both Bitcoin and Ethereum. While Ethereum is even marking an all-time low, the current outflow at Bitcoin can at least be described as historically remarkable. These data are to be interpreted as bullish, as they obviously underline the accumulation of the two top crypto currencies according to market capitalization.
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