Bitcoin and Ethereum Balances on Crypto Exchanges Keep Falling, Could Drive Prices Higher: Report

In Kraken’s last two Crypto On-Chain Digest reports (End of Summer Sale and SHOCKTOBER), they had pointed out that a supply shock, driven by long-term holders, might push Bitcoin (BTC) and Ethereum (ETH) prices considerably higher than current levels.

Well, price followed through and the data indicates that long-term holders are still confident in the current crypto market bull run. In the most recent Kraken Intelligence report, Ain’t Over ‘Til It’s Over, the researchers examined various on-chain metrics and indicators to glean insights into what’s behind the current market strength and where the crypto ecosystem stands in this market cycle.

As noted in the update from Kraken, the supply is “rapidly exiting exchanges, a common indication that market participants may be moving funds into cold storage for long-term holding.”

Since June 2021:

  • The amount of BTC sitting on exchanges “fell by 9.6% to a 3-year low of ₿2.426 million ($139.8 billion) amid greater demand and dwindling immediately marketable supply.”
  • The total ETH supply sitting on all exchanges has “dropped by Ξ8.41 million (~$35B), or more than 37% since reaching a top of Ξ22.577 million (~$93.7B) in August 2020.”
  • With a smaller supply pool available for trading, “further demand could tighten the supply squeeze and drive BTC and ETH prices higher.”

As mentioned in the report, for as fast as prices have surged to all-time highs, two metrics — BTC’s Reserve Risk and ETH’s MVRV Z-score — “indicate that both assets are far from overbought, and that confidence in the current price level is greater than it was during prior all-time highs reached in May.”

As stated in the report from Kraken, Litecoin (LTC) has a reputation for “unexpected and abrupt price surges during bull markets.” For instance, in the bull runs of 2013 and 2017, LTC surged to the occasion and “took the spotlight out of nowhere with respective 638% and 1,160% increases in the span of several weeks.” At the time, a number of on-chain indicators “foreshadowed LTC’s abrupt rise, and now the latest data shows that demand for LTC may be rising under our noses once again,” the report added.

You may check out the complete report from Kraken here.

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