- Bitcoin holdings on exchanges have dropped by over ₿390,000 since February, the biggest ever drop
- The move undoes seven years worth of solid growth
- The drop has likely been fueled by holders cashing out during the coronavirus pandemic
Bitcoin holdings on exchanges have crashed this year, reversing by the highest ever amount and undoing seven years of continual growth. This is likely to be down to holders cashing out as they use their Bitcoin to supplement lost income due to the coronavirus, as well as some selling out in fear of its potential performance during a global recession.
Bitcoin Exchange Holdings Collapsing Since February
According to data from Glassnode, the amount of Bitcoin held on exchanges has been growing consistently since 2013, hitting 2.97 million in February this year, where it topped out:
Since peaking on February 12, the amount of Bitcoin on exchanges has dropped considerably, falling from 2.97 million to 2.58 million at the end of September:
This drop has taken us back to levels not seen since November 2018 and shows no sign of reversing any time soon.
Coronavirus Sparks Mass Withdrawals
The timing of the top out is not coincidental, coming as it did at a time when the coronavirus threat was just becoming realized in the west. It is possible that the rationale behind the withdrawals changed over the course of the year but all of which led to this end result.
Back in February, parts of China were already in lockdown as the virus took hold, meaning that Bitcoin holders may have started withdrawing to pay for everyday items. In contrast, western Bitcoin holders were likely to have been selling their Bitcoin due to concerns over its potential performance as the pandemic took hold or even due to fears that the virus might shutter exchanges.
More Lockdowns Will Mean More Sales
As the impact of COVID-19 hit home in the west in March, with lockdowns becoming widespread, the amount of people needing to free up cash quickly increased, resulting in much more Bitcoin selling. We can assume this because the movement out of exchanges has continued even as Bitcoin’s price has increased throughout the year.
With a second wave of the coronavirus taking over parts of Europe and more hardship seemingly yet to come, Bitcoin holdings on exchanges could well continue to tumble into 2021. This is despite the sector seemingly entering a bull run due to uncertainty of the global financial markets caused, ironically, by the coronavirus.