According to a recent study by Cryptorank, 6.3 % of the total Bitcoin supply is left in exchange wallets.
Bitcoin (BTC) supply is dwindling up to levels not observed in years, which is great news for an orange Christmas. According to a recent tweet by CryptoRank, crypto exchanges own only 6.3 % of the total Bitcoin supply or 1.3 million BTC.
The reducing supply is nothing surprising as it has been moving down since the Bitcoin block reward was half in 2020. The availability of BTC on exchanges followed suit, gradually declining over the last year. In October 2020, just before the all-time highs of the 2020 Christmas season, exchange wallets were for 9.5 % of the BTC supply, and 7.3 % in July this year. The December level of 6.3 % is the lowest in 2021.
Coinbase's supremacy in the BTC wallet sector is also fading. The American exchange used to own more bitcoin than the rest of the world altogether. Over the last year, its control has dropped from 50.52 % to 40.65 %.
The statement came after a wave of bullish price indicators that coincide with Bitcoin's rising price action. To start with, the illiquid BTC supply has glazed over for the winter, with a monthly supply of 100,000 BTC moving from a "liquid" to an "illiquid" state. In other terms, more BTC is stored securely in cold storage than being mined.
The on-chain analytics company Glassnode provided more positive news about exchange action. The seven-day moving average for BTC's exchange inflow volume recently dropped to a five-month low of 978.452 BTC and has been moving downward week over week. The exchange supply deficit may increase if fewer BTC is transferred to exchanges.
Moreover, many retail investors and certain companies keep their BTC on exchanges, implying that the "illiquid" BTC may be considerably lower.Some Bitcoin hodlers suggest leaving the custody of their keys to exchanges rather than storing their Bitcoin offline in cold storage.
Despite the utmost efforts of Bitcoiners like Andreas Antonopolous to ensure "not your keys, not your Bitcoin" is part of the daily BTC motto, Binance CEO and co-founder Changpeng Zhao has promoted the hot wallet practice.
As a result, whereas 1.3 million BTC remain on exchanges, they may not be "circulating," leading to the illiquid supply.
Although calls for a "Santa Rally" based on optimistic analytics, the bears are not out of the woods yet though. BullRun Invest's tweet, based on Glassnode data, shows that 24.6 % of all BTC supply is trading above $47,000.
It means that nearly a quarter of the BTC purchased at that price is now worthless. There may be fewer presents underneath the tree tomorrow if BTC failed to break into the 50s.