- The amount of Bitcoin held by cryptocurrency exchanges has fallen consistently for almost six months
- Exchange Bitcoin holdings have dropped from 2.9 million to 2.65 million, the biggest continuous fall in Bitcoin’s history
- The drop echoes 2016’s post-halving activity which reversed in early 2017
The amount of Bitcoin held on cryptocurrency exchanges has seen its biggest ever continuous decrease following three and a half years of growth. Data from Glassnode shows that some 250,000 bitcoins have left cryptocurrency exchanges since February this year, eclipsing the last similar drop in 2016, falling to levels not seen since May 2019. Bitcoin miners selling their holdings and people cashing out due to Coronavirus are the likely culprits, which would make any turnaround difficult to predict.
Cryptocurrency Exchanges See 6.89% Bitcoin Drop Since February
Glassnode’s data, which takes into account Bitcoin holdings from 13 top cryptocurrency exchanges, shows that the amount of Bitcoin held on those platforms has reduced significantly since the start of February, with no exchange escaping the trend:
This reversal takes us back to levels last seen in May 2019 and marks a more pronounced decline than we saw in 2016, the last time cryptocurrency exchanges experienced this type of continuous drop. In January 2017, the monitored exchanges had holdings of some 850,000 bitcoins which grew through the bull run and even the bear market to a peak of 2.9 million in February this year, a 241% rise. This peak precipitated a steady decline that is almost six months old and so far registers a 8.6% loss.
Miners Selling Bitcoin Looks to be Likely Reason
When looking for reasons behind the drop, it is clear that the Bitcoin halving plays a huge part. Both the current drop and the last comparable drop in H2 of 2016 mark the immediate post-halving period, with a years-long runup followed by a months-long decline:
The closeness with which the two datasets marry up leaves us in no doubt that the halving is a key reason behind the drop in Bitcoin held on cryptocurrency exchanges. The reason for both the drop itself and the steady, consistent manner in which it takes place is suggestive of miners selling the Bitcoin holdings they had been storing up for the past four years in order to keep the lights on given their reduced earnings post-halving.
Coronavirus Impact Can’t Be Ignored
There may also be an additional factor that is making this year’s drop worse than 2016’s – Coronavirus. It is highly likely that those enduring tough times due to the effective closure of global economies are selling their Bitcoin to make ends meet, and we don’t yet know when this pattern might stop. This would also explain why the outflows on cryptocurrency exchanges occurred in February, a month ahead of the halving.
2016’s post-halving drop in Bitcoin holdings on cryptocurrency exchanges began to reverse on New Year’s Day 2017, almost exactly five months after its peak. We are currently just over five months past the peak in February, so if this drop is purely mining related then we might expect to see a turnaround soon. If other factors are in play however then we could well see the holdings fall further before they turn round.