The amount of Bitcoin stored in crypto exchanges by investors continues to be low despite BTC bulldozing past $10,000 and $11,000. Usually, when Bitcoin breaks significant resistance levels, investors and particularly BTC miners, send their hard-earned Bitcoin to cash in on a major move such as the one witnessed from $9,100 levels to $11,400.
Surprisingly, this has not been the case as explained by the team at Arcane research via the following tweet.
The BTC deposits at major exchanges has dropped significantly since April and is currently at the low-levels of May 2019. This suggests that more users prefer to store their BTC in private wallets, which may lead to a lower selling pressure the upcoming months.
Data: @glassnode pic.twitter.com/I6qCc8Uhmu
— Arcane Research (@ArcaneResearch) July 29, 2020
More Investors are Storing their Bitcoin Offline and View BTC as Digital Gold
One possible explanation of more Bitcoin investors opting to store their BTC offline is the increased popularity of trading BTC derivatives. What this means is that crypto traders can use a fraction of their Bitcoin holdings to trade with leverage of up to 125x. Therefore, traders will only send to crypto exchanges the Bitcoin needed to trade for the day and store the rest of their BTC stash offline.
Secondly, and due to the Fed and the European Central Bank continually printing fiat, more and more investors are treating Bitcoin as digital gold. Furthermore, they are using BTC as a hedge against inflation that will result from a surplus of fiat in the financial markets.
Bitcoin is Off to an Exciting Q3 2020
Also to note, with the aforementioned move from $9,100 to $11,400, Bitcoin has kicked off the third quarter of 2020 on a high note. The first of July found Bitcoin trading slightly above $9,000 and if its momentum is sustained, the third quarter of 2020 might also be as profitable as Q2.
If Bitcoin manages to close Q3 on a high note, it would confirm a BTC bull market. The last time Bitcoin had a profitable Q2 and Q3 was in 2017. This fact has been highlighted by the team at Skew via the following Tweet.
With two weeks left to go, it looks like #bitcoin will have once again a strong Q2 pic.twitter.com/9YvcpY9nY7
— skew (@skewdotcom) June 16, 2020