On-chain data shows the Bitcoin exchange, which had previously been stuck in a consolidation, has begun to follow a new trajectory.
Bitcoin Spot Exchange Supply Has Seen a Sharp Decline Recently
In a new post on X, analyst Willy Woo discussed the trend toward the establishment of a Bitcoin spot exchange. This metric tracks the total amount of cryptocurrency sitting in the wallets of all centralized exchanges.
This part of the supply chain refers to the actual tokens of the asset that exist on the blockchain. An exchange offering that does not involve users owning BTC, as is the case with derivatives, is known as “BTC paper.”
When the exchange rate of a place increases, it means that the investors put the whole number of coins in the wallets related to these platforms. As one of the main reasons why owners may transfer their BTC to an exchange is for purposes related to sales, such a tendency can have a bearish effect on the price of the asset.
On the other hand, a declining index means that the exchange’s outflow is more than the exchange’s income. Investors usually take their coins to protect themselves if they plan to hold for a long time, so this kind of trend can be bullish for cryptocurrency.
Now, here is a chart showing the trend of Bitcoin exchange rate innovation over the last few years:
As shown in the graph above, the Inventory of Bitcoin exchanges saw a significant decline during the fall of FTX back in November 2022. This suggests that large movements of coins are occurring on these platforms as the commodity bear market bottoms out.
After this decline, the index began a consolidation phase that lasted all of 2023 and most of 2024. This trend came to the fore in the last few months of 2024, when the metric registered a major crash.
This exit came along with Bitcoin’s new all-time high, which means that investor accumulation may have played a role in this. In total, 240,000 BTC left exchange-related wallets during this downturn.
Woo pointed out that Microstrategy’s purchases during this period were summed up to about 192,000 BTC, which means that there are other whales in the market taking significant amounts from the exchange.
So far, the downtrend in the exchange has shown no signs of reaching the bottom, as the exit has continued into 2025. If investors really keep accumulating in the near future, then Bitcoin could benefit from another bullish momentum.
BTC price
Bitcoin continued its sharp recovery over the past 24 hours as its price retreated above the $101,700 mark.
