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Why the recent sell-off is different than the May crash

Bitcoin’s on-chain data show: The “Exchange Reserve Indicator” looks completely different in the current sell-off than in the crash in May.

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Bitcoin spot exchange reserve continues to decline despite the enormous slump

As explained in a CryptoQuant article, the BTC reserve on the spot exchanges has actually declined amid the current price slump.


The bitcoin reserve of all exchanges is an indicator that shows the amount of coins in the wallets of all centralized spot exchanges. If the value of the reserve moves up, it means that more investors are sending their BTC to exchanges to withdraw them to buy fiat or altcoins.

Likewise, a downward trend in the metric means that investors are withdrawing a net amount of Bitcoin from exchange wallets into personal wallets in order to hoard them or sell them via OTC transactions.

Here is a chart that shows how the value of the indicator has changed over the past year:

Bitcoin exchange reserve appears to be falling | Source: CryptoQuant

Looking at the graphic above, there are some interesting features to be seen. In the run-up to the bull run in 2021, the exchange reserve decreased from a very high value. That makes sense – because a downtrend like this means investors are piling up more coins, which can drive the price up.

That could have triggered the sell-off

Then, as Bitcoin hit its all-time high (ATH), the metric quickly began to rise again, indicating a sell-off – and the price plummeted as a result.

However, the current slump looks different. BTC reserves have actually been in decline, suggesting that investors on these spot exchanges are not getting out anytime soon.

That in turn would mean that this sell-off was triggered exclusively by derivatives – in contrast to the crash in May, in which the spot exchanges also played a major role.

At the moment (time of this article), the Bitcoin price is around $ 47,000, a decrease of 5% in the last 7 days. Last month the cryptocurrency made 3% in profits.

The following chart shows the performance of the coin over the past five days.

The price of BTC shows great volatility | Source: BTCUSD on TradingView

Two days ago, Bitcoin experienced absolute price chaos when the value of the coin fell from $ 50,000 to $ 43,000 within fifteen minutes. And just minutes later, BTC had already bounced back to over $ 47,000.

Yesterday the value of the coin fell back to $ 44.4k – but now it’s back over $ 46k. Right now it’s hard to say where price will go next, but one thing can be expected with certainty: more volatility in the future.

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Proof of text: Newsbtc

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Hasan Sheikh
Hasan, who loves technology and games, is studying Computer Engineering at Delhi JNU. He has been writing technology news since 2016.


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