Bitcoin balances on exchanges have registered a drop of around 30% compared to early 2020 during the Covid-19 pandemic. In a recent report, Fidelity explained that Bitcoin held at exchanges fell by 30% from all-time highs over three years ago. This means that there will be fewer BTC available for sale if demand increases in a short period of time.
Bitcoin Balances Drop By 30% Since 2020
Bitcoins continue to be withdrawn from exchanges as shown by Fidelity. Exchanges have now around 2.2 million BTC at their disposal for users to purchase. This could be very positive for Bitcoin price in the case of a sudden demand in Bitcoin, as there will be fewer BTC available to absorb a shock in the demand for this virtual currency.
Another thing that Fidelity mentioned in its report is that the illiquid supply is also close to record highs at 68.6%. The question is whether there will be a decision from investors to take profit at these prices or if it is necessary for the price to increase before users start selling.
While the market has been moving higher in recent days, there is a clear interest in the long-term to hold BTC and wait for higher prices. Although there are no certainties about what could happen with Bitcoin and its price, the largest virtual currency in the world will experience a halving event as soon as 2024, which could be a catalyst for an increase in the demand for this virtual currency.