The notable blockchain analytics firm, Glassnode, has confirmed this development. They have observed that on July 28, BTC’s exchange netflow reached its highest point in three months, totaling $9.4 million.
Is Bitcoin Price Volatility About to Surge?
Investors have been taken aback by the sudden rise in Bitcoin’s on-exchange reserves. The main worry is the possibility of a decline in Bitcoin’s price, particularly after its recent drop to $29,000.
When the supply of BTC on exchanges increases, it usually indicates a higher willingness among holders to sell, which can impact its market value.
Ali Martinez, the Global Head of News at BeInCrypto, referred to data from Santiment and advised investors to be prepared for potential spikes in Bitcoin price volatility.
Surprisingly, the increase in BTC’s presence on exchanges contradicts the recent trend of decreasing exchange balances. This trend was linked to the increasing adoption of self-custody solutions.
Only two days earlier, on July 26, Santiment reported the lowest number of BTC on exchanges since November 2018, with a total of 1.17 million BTC.
Long-Term Holders Stay the Course
Even though Bitcoin has recently bounced back to $30,000, long-term holders have consistently increased their BTC positions, as confirmed by IntoTheBlock data.
Surprisingly, this price increase did not attract short-term holders who typically take advantage of rising asset values. This situation is in stark contrast to 2019 when Bitcoin’s price dropped to $11,000, causing a surge in short-term holders.
While the ongoing accumulation by long-term holders showcases their trust in Bitcoin, it may not necessarily result in a positive price reaction.
Historical data from IntoTheBlock suggests that Bitcoin prices tend to rise when short-term holders are accumulating.
BTC Struggling to Maintain $30k Level
Following its peak at $31,500 for the year, BTC’s price has remained relatively stable.
According to data, BTC experienced a 1.8% decline, reaching a weekly low of $29,045. Currently, Bitcoin is trading slightly above $29,296 at the time of writing.