Although the recent bankruptcy of FTX and other exchanges has accelerated this process, the number of bitcoins withdrawn from exchanges has been falling since the beginning of 2020. On this basis, the analyst concludes James Streets points out that brokers could run out of bitcoins in 2015, i.e. two years from now.
Even if we don’t reach that level, the simple cut indicates that investors are suspicious of the industry. In other words, they choose to store their bitcoins themselves, which is highly recommended.
As a result, we can also expect a reduction in selling pressure i.e. less resistance, allowing Bitcoin to appreciate.
At this rate, the exchanges will run out of bitcoin
While brokerage firm portfolio balances experienced tremendous growth between 2013 and 2020, when they peaked, the opposite has been happening in the past three years.
More recently, mistrust has gripped the industry, with brokers scrambling to release their proof of reserves as they try to quell the panic. Nevertheless, after the bankruptcy of FTX, thousands of bitcoins were withdrawn from the exchanges.
Taking into account this pace of withdrawals, one analyst pointed out that Bitcoin could run out as early as 2025.
“One million bitcoins have been withdrawn from exchanges since the peak in March 2020”, he is writing analyst James Streets. “From 3.2 million to 2.2 million, that is about 11.7% of the current supply.”
“600,000 BTC withdrawn in 2022, at this rate exchanges will be dry in 2025/2026.”
Another important point is that we can observe an increase in deposits when the market indicates that it is ready to sell.
For example, in the chart above, you can see that this happened twice in 2021, approximately in April and November, when BTC hit $64,900 and $69,000 respectively, and dropped shortly after.
Therefore, not only can investors see the importance of self-custody, but the drop in brokerage portfolio balances can also provide a clue when it’s time to sell, complementing other tools such as the market fear and greed index.
Bitcoin falls this Thursday (9)
While the above theory suggests that the market is far from peaking, Bitcoin is showing a slight decline this Thursday (9), with a 1% pullback on the daily chart. Other cryptocurrencies are following the trend.
However, the market cap of cryptocurrencies remains above $1 trillion, a range that can be considered an important support.
By all indications, bulls may be taking a breather before attempting to break the $25,000 mark, which promises to be a contested region. Moreover, rumors that the SEC wants to ban cryptocurrency staking may also have affected the market.
Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
