Are Bitcoin Holders Exiting US Exchanges? What Data Says
On-chain data shows that the Bitcoin exchange reserve ratio for US platforms versus offshore platforms has continued to decline recently. Here’s what that tells us.
Bitcoin’s FX Reserve Rate Has Been Falling for Some Time
As explained by an analyst in a CryptoQuant post, the BTC reserve of US exchanges is falling. The “exchange reserve” is an indicator that measures the total amount of Bitcoin that is currently in the wallets of a centralized exchange or a group of such platforms.
The metric of interest here is not really the FX reserve, but the “FX reserve rate”. As the name of this indicator indicates, it tells us about the relationship between the foreign exchange reserves of two sets of platforms. In the context of the current discussion, the two sets of exchanges are the US and foreign platforms.
When the value of this ratio increases, it means that the number of coins on US-based platforms is increasing relative to the supply on offshore exchanges. This naturally means that US platforms are receiving a larger amount of deposits (or just smaller withdrawals) than foreign ones.
On the other hand, the falling value of the metric suggests that global platforms are experiencing greater growth in their bookings than US exchanges at the moment.
Now, here’s a graph that shows the trend in the Bitcoin exchange reserve rate for US platforms versus offshore platforms over the past two years:
The value of the metric seems to have been going down in recent days | Source: CryptoQuant
As you can see from the chart above, the Bitcoin exchange reserve ratio for these two sets of platforms has been falling since the first half of 2022. This means that the supply on US exchanges has been steadily decreasing compared to that of the platforms. foreign.
The decline was especially pronounced during major slumps when some major platforms went bankrupt and FUD spilled across the market, prompting investors to withdraw their coins from centralized exchanges.
However, while these glitches may have caused temporary accelerations in the drawdown, Bitcoin’s total exchange supply has been in decline for a long time. The decline was also a market-wide phenomenon, meaning all exchanges are facing a shrinkage in their supply.
However, considering that the FX reserve ratio has continued to decline, this means that the decline has been especially steep for US-based platforms. This would imply that investors are fleeing US stocks at a faster pace during this period.
“Due to regulatory requirements, US investors may no longer have as much faith in exchanges and prefer to transfer their currencies to offshore exchanges or to their wallets”, explains quant. “If American policymakers put pressure on this sector, they risk falling behind the rest of the world.”
At the time of writing, Bitcoin is trading around $28,500, up 4% over the last week.
BTC has plummeted in the last 24 hours | Source: BTCUSD on TradingView
Featured Image of Kanchanara from Unsplash.com, Charts from TradingView.com, CryptoQuant.com