BTC Exchange Stock Drops to 5-Year Level as Investors Set for Bull Market: Bitfinex

The latest edition of the weekly market report from cryptocurrency Bitfinex, a centralized exchange for bitcoin (BTC), has fallen above levels seen at the end of January 2018.

According to Bitfinex Alpha, only 2.03 million BTC are currently sitting on exchanges. Bitfinex observed a correlation between the decline in exchange reserves and the rise in crypto prices, suggesting that the market may be in for a bull run.

The stock of the Bitcoin exchange has decreased

Bitfinex has revealed that the stock of BTC on the BTC exchange has been declining since reaching its peak in March 2020. This was when property prices began to rise. High reserves are associated with the beginning of a bull market, indicating that there may be an inverse relationship between BTC price and currency reserves.

As the price of the crypto rises, the currency's reserves continue to decline, indicating that the lack of BTC on trading platforms may be the driving force behind the price movement. However, BTC's decline in November 2021 and the decline in exchange reserves challenged the relationship, indicating that investors tend to hold less BTC on exchanges during bear markets.

However, many market indicators show that long-term holders and a majority of short-term investors are currently in the HODL phase and are committed to holding onto their assets for the long term.

A group of investors position for a bull market

While 12-18 month supply holders are currently in a position to take profits on some holdings, the long and short supply has remained inactive. Bitfinex says it's a sign that investors across multiple groups are confident that BTC won't see a significant drop from its current price.

In particular, the analysts of Bitfinex Green October succeeded in three cases where BTC ended September in a positive way. October is the month when BTC records positive movements regardless of September's performance.

“Importantly, we closed September in the green, a rare occurrence. “Historically, a positive September leads to October, and the volatility and futures market metrics all point to higher volatility and some upside at least to higher timeframes,” the analysts said.