Bitcoin Exchange Depositing Addresses Plummet to Six-Year Low
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The number of Bitcoin exchange depositing addresses has plummeted to its lowest level since 2016, signaling a potential decline in selling pressure.
According to data from CryptoQuant, the number of addresses sending inflow transactions to exchanges dropped to 132,100. This marks a massive decrease from recent highs, suggesting fewer investors actively sell their Bitcoin (BTC) on spot exchanges.
A lower number of deposit addresses could indicate several factors. One possibility is that investors are holding onto their Bitcoin, anticipating future price increases. Another explanation could be a shift in trading activity towards other cryptocurrencies or derivatives markets.
Mixed Signals for Bitcoin
While a decline in depositing addresses may seem positive for Bitcoin’s price, other market factors must also be considered.
As of Sept. 16, the total amount of Bitcoin held on exchanges has risen to over 3.020 million BTC, up from approximately 3 million BTC on Sept. 1. This increase suggests that traders are transferring more Bitcoin to exchanges, potentially indicating a growing appetite for selling.
Meanwhile, the Bitcoin mining community continues to face challenges. Miners recorded their lowest revenues in nearly a year in September, and signs of distress may persist as BTC accumulation slows.
When miners’ revenues decline, they may be forced to sell more of their mined Bitcoin to cover operational costs like electricity and equipment maintenance. The rising exchange reserves and increasing mining difficulty could further pressure Bitcoin’s price.
Bitcoin Breaks Away From Gold
Additionally, Bitcoin has decoupled from gold, with its price declining as gold reaches new all-time highs. This negative correlation suggests that investors increasingly turn to traditional safe-haven assets like gold in response to a risk-averse market sentiment.
The divergence between Bitcoin and gold could be attributed to several factors, including concerns about the long-term sustainability of the Bitcoin mining industry and broader macroeconomic uncertainties. As investors seek to protect their wealth from potential market volatility, the appeal of gold may outweigh the perceived risks associated with Bitcoin.
The BTC price fell by 3.76% to around $57,769, continuing its depreciation from the local high of $60,670, established four days ago.
