Bitcoin Balances On Exchanges Visit New Lows

The Bitcoin balances held on exchanges are continuing to decrease, the latest Bitcoin news show. Today, they reached a 13-month low while one blockchain analyst suggested that investors should use caution in how they interpret the on-chain data.

As reported by the leading blockchain analytics firm Glassnode, the new lows in exchange balances show that the 13-month low of about 2.62 million BTC held on exchanges is a further step down from June 30, a date which saw 2.63 million in Bitcoin balances held on exchanges.

Previously, we reported that exchange balances have been in a decline for the better part of 2020, while several theories discussed the reason for the move away for exchanges. Some insiders even pointed to over-the-counter (OTC) deals, while others noted that there is an increase in the Bitcoin whale population – which is in fact why large holders increasingly prefer to take full control of their own coins.
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In 2020, we have seen a general decline in Bitcoin balances on exchanges. However, the downtrend is still a relatively new thing for the most dominant coin, which can be seen when zooming out on the longer-term chart back to 2017. Since then, the exchange balances have been pretty much in a continuous uptrend, with some minor pullbacks along the way.

Meanwhile, Rafael Schultze Kraft who is the Chief Technology Officer (CTO) of the firm, was a guest in a recent podcast with Stephan Livera, suggesting that on-chain data should not necessarily be taken at a face value. He also added that it is “very difficult” to estimate things like how many people are “hodling” Bitcoin.

“This is a question that has been very difficult to answer because what the approximation has been until now is simply to look at addresses,” Schultze-Kraft said, adding that the problem with that is that one user can control more than one address.

“And there’s also addresses that hold funds of multiple users. Think about an exchange address for instance,” the Glassnode CTO explained.

The CTO also warned that the Bitcoin balances on exchanges are not a simple phenomenon – they also might indicate that whales are learning how to do self-custody, saying that it is probably “too easy” to reduce it to that. Anyways, the latest cryptocurrencies news show a decline in this segment, which may worry some long-term crypto investors.