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Bitcoin Exchange Reserves Lowest In 3 Years, What Does It Mean For The Price?
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On-chain data shows Bitcoin exchange reserves have hit the lowest value in 3 years, here’s what it might mean for BTC’s price.

Bitcoin Exchange Reserves Lowest In 3 Years As Negative Netflows Continue

As pointed out by a CryptoQuant post, exchange reserves have been continuing their downtrend, and have now reached lows not seen since 3 years ago.

The all exchanges reserve is an indicator that shows the total amount of Bitcoin held in wallets of all centralized exchanges.

An increase in the metric’s value suggests more investors are depositing their coins for withdrawing to fiat or altcoin purchasing. On the other hand, a decrease means more buyers are moving their BTC to personal wallets for hodling or OTC deals.

Here is the latest chart for the Bitcoin all exchanges reserve:
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The BTC all exchanges reserve plunges down
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As the above graph shows, the value of the indicator has sharply gone down recently. The current level of the metric is the lowest it has been in the last three years.

As already mentioned before, a downtrend like this one means investors are withdrawing their coins from exchanges possibly to hodl or sell through OTC deals.

Related Reading | Indicators Show Bitcoin Might Be Gearing Up For One Last Push Up

Such values are typically bullish in the long-term as they may mean that there are more long-term holders in the market who are hodling out of exchanges.

There is another relevant indicator here, called the Bitcoin netflow, which shows the net amount of BTC entering or exiting exchanges.

A positive spike in the chart for the exchange netflows means exchanges are observing more inflows compared to the outflows. A negative value implies just the opposite.

Big spikes or a prolonged period of smaller spikes in one direction can affect the value of the exchange reserves. Naturally, positive values can increase the reserve while negative ones can decrease it.

Related Reading | Ukraine Adopts New Law To Legalize Bitcoin And Other Cryptocurrencies

The below chart shows the current trend for the exchange netflows:
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The BTC netflows show big negative spikes
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As expected, the netflows have been negative recently, leading to the low values of the Bitcoin exchange reserves.

What Could It Mean for BTC’s Price?

As mentioned earlier, a downtrend in the exchange reserves can be bullish for the price in the long-term as it may imply a greater amount of long-term holdings. This has also been usually true historically, but there can be certain exceptions.

However, looking at the current Bitcoin price movement, it looks like selling has been going on. But as the exchange reserves haven’t shot up (unlike the crash from the May ATH), sales are being done likely through OTC deals.

Now, depending on if most of the outflows are being done to sell through OTC deals, a bearish picture can be there instead.
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BTC's price continues to decline | Source: BTCUSD on TradingView
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Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant
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September 13, 2021
Majority of Korean crypto exchanges to shut down this month, insiders say
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The deadline for South Korean crypto exchanges to meet new compliance requirements is looming fast, with all operators expected to submit requests for an official license with the Financial Services Commission (FSC) no later than Sept. 24.

Industry actors and representatives for smaller exchanges have contested the new requirements for much of the past year, yet without success. Now insiders reportedly expect that close to 40 of the country’s estimated 60 crypto operators will be forced to shut down.

The crux of their objection has been the obligation that all exchanges show evidence that they are operating using real-name accounts at South Korean banks. The FSC has justified by arguing that there is a high demand from customers for more protection for their assets held at smaller crypto platforms. Yet South Korea’s banks have, for the most part, refused to engage in any risk assessment process for applicant exchanges, except for the country’s top four trading platforms.

These four exchanges – Upbit, Bithumb, Korbit and Coinone – already account for over 90% of South Korea’s total traded volume, and experts have in recent months made the case that the FSC’s new framework is poised to further cement the country’s crypto space as a monopolized market.

Moreover, estimates by Kim Hyoung-joong – a professor and head of the Cryptocurrency Research Center at Korea University – predict that the mass exchange closures will eliminate 42 “kimchi coins” – a moniker for smaller altcoins that are listed on smaller platforms and traded against the Korean won. Lee Chul-yi, head of local crypto exchange Foblgate, has told the Financial Times that:

“A situation similar to a bank run is expected near the deadline as investors can’t cash out of their holdings of ‘alt-coins’ listed only on small exchanges. […] They will find themselves suddenly poor. I wonder if regulators can handle the side-effects.”

Related: Regulations drive Korean exchanges to delist, warn against high risk coins

With altcoins estimated to account for 90% of traded volume in South Korea’s crypto markets, the FSC has reportedly advised those exchange operators who expect to shut down to notify their clients no later than Sept. 17. Cho Yeon-haeng, president of Korea Finance Consumer Federation, has claimed that customer protection is unlikely to be the priority for those exchanges facing imminent closure and that “huge investor losses” are therefore expected due to the freezing of assets and suspension of trading on smaller platforms.

The regulatory heat will also affect international exchange operators. Binance has already pre-emptively halted Korean won trading pairs this summer to ensure it does not foul Korean authorities.

The new measures have been designed to curb Koreans’ enthusiasm for crypto trading amid concerns that retail investors, especially those from younger generations, are borrowing excessively in order to trade as they struggle with suppressed wages, a frozen job market and ever-rising real-estate prices.