Just 1.3 million Bitcoin left circulating on crypto exchanges

The Bitcoin market has been extremely volatile in recent weeks. With the drop in value of cryptocurrencies, many users have had to offload their holdings and sell at a loss. This is forcing investors to take another look at how they can invest safely without losing their entire savings account or putting it all on the line with one coin.

The “bitcoin price” is a popular cryptocurrency. There are only 1.3 million Bitcoin left circulating on crypto exchanges.

Bitcoin (BTC) supply is drying up to levels not seen in years, which is good news for an orange Christmas. According to a recent tweet by CryptoRank, cryptocurrency exchanges own just 6.3 percent of the entire Bitcoin supply, or 1.3 million BTC. 

The declining supply is nothing new; it has been moving down since the Bitcoin block reward was halved in 2020. The availability of BTC on exchanges followed suit, gradually declining over the last year. In October 2020, right before the all-time highs of the 2020 Christmas season, exchange wallets accounted for 9.5 percent of the BTC supply, and 7.3 percent in July this year. The December result of 6.3 percent is the lowest since 2021.

Coinbase’s dominance in the BTC wallet space is also eroding. The American exchange used to own more bitcoins than the rest of the world combined. Over the last year, its dominance has dropped from 50.52 percent to 40.65 percent.

Just 1.3 million Bitcoin left circulating on crypto exchanges

The announcement comes on the heels of a slew of bullish price indicators that coincide with Bitcoin’s higher price movement. To begin with, the illiquid BTC supply has frozen over for the winter, with a monthly supply of 100,000 BTC changing from a “liquid” to a “illiquid” condition. In other words, more BTC is locked up in cold storage than gets mined.

The on-chain analytics startup Glassnode offered more encouraging news about exchange activity. The seven-day moving average for BTC’s exchange inflow volume just hit a five-month low of 978.452 BTC and has been drifting downward week over week. The exchange supply shortfall might worsen if fewer BTC are transmitted to exchanges.

It’s also worth noting that many individual investors and businesses keep their BTC on exchanges, implying that the ‘illiquid’ BTC is considerably lower. Rather than putting their BTC into cold storage, some BTC hodlers would entrust the safekeeping of their keys to exchanges.

Related: Bitcoin has to break beyond $51,000 to avoid a fresh sell-off by BTC whales.

Despite the best efforts of Bitcoiners like Andreas Antonopolous to ensure that ‘not your keys, not your Bitcoin’ is part of daily BTC motto, Binance CEO and co-founder Changpeng Zhao has pushed the hot wallet practice.

As a consequence, although 1.3 million BTC are held on exchanges, they may not be circulating and instead add to the illiquid supply.

Despite expectations for a “Santa Rally” based on optimistic statistics, the bears aren’t out of the woods just yet. BullRun Invest’s tweet, based on Glassnode statistics, reveals that 24.6 percent of total BTC supply is trading over $47,000.

It means that nearly a fourth of the BTC purchased at those prices is now worthless. There may be fewer gifts beneath the tree tomorrow if BTC fails to break into the 50s.

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