According to a recent crypto data provider CryptoQuant analysis, Bitcoin has experienced its most significant decline in the number of addresses associated with inflows, indicating selling activity, in history. Over 612 days and ongoing, there has been an 80% decrease in address logging inflows since October 2021. If we measure from the peak in May 2021, the decline in addresses rises to an even more substantial 84%.
This decline surpasses the previous record set during the 2017 parabolic top and subsequent bear market, which saw a 78.5% decrease in addresses associated with inflows. However, it’s important to note that these figures do not account for addresses that have transitioned to self-custody or differentiate between miner activity and retail investors.
Shrinking Bitcoin supply has been consistent
In addition to the decline in inflows, there has been a consistent trend of shrinking Bitcoin supply on exchanges despite occasional rising supply. Since March 2020, Bitcoin reserves held on exchanges have decreased by over 30%. This decline, both in terms of duration and depth, sets yet another record.
The period leading up to March 2020 saw the highest-ever recorded supply of Bitcoin on exchanges, following a decade of consistent supply growth. However, the subsequent 1,200 days have marked the first prolonged period of decline in Bitcoin’s history, highlighting a significant shift in market dynamics.
These findings indicate that more Bitcoin holders prefer to store their assets in self-custody wallets rather than on exchanges. This trend may be driven by increasing awareness of security risks and a desire for greater control over personal holdings.
As Bitcoin continues to experience these historical changes in inflows and supply dynamics, the market eagerly observes how these developments will impact the overall landscape. It remains to be seen whether this trend will persist or if new patterns will emerge, shaping the future trajectory of the world’s leading cryptocurrency.
