On-chain data shows that Bitcoin and Ethereum exchange supplies have gone opposite ways recently, a sign that a rotation may be on.
Bitcoin’s Exchange Supply Has Gone Down While Ethereum’s Has Risen
According to data from the on-chain analytics firm Santiment, the Supply on Exchanges metric has dropped to the lowest level since December 2021 for Bitcoin recently.
The “Supply on Exchanges” keeps track of the total amount of a cryptocurrency’s supply in the wallets associated with all centralized exchanges.
When the value of this metric rises, it means the investors are making deposits of the asset to these platforms right now. Holders transfer their tokens to the exchanges whenever they want to use one of the services they provide, which can include trading.
On the other hand, a decline in the indicator suggests that investors are currently taking coins off the exchanges and potentially holding onto them for extended periods.
Now, here is a chart that shows the trend in the Supply on Exchanges for the top three coins in the sector by market cap: Bitcoin (BTC), Ethereum (ETH), and Tether (USDT).
The value of the metric appears to have been moving oppositely for BTC than the other two | Source: Santiment on X
As displayed in the above graph, the supply of Bitcoin exchanges has sharply declined over the last few months. The metric’s value now stands at 942,170 BTC, the lowest the cryptocurrency has observed since December 2021.
At the same time as these BTC withdrawals have come, Ethereum and Tether have seen net deposits instead. As mentioned, deposits can signify that investors may want to trade away the asset.
As such, given the opposite trend taking place in Bitcoin, it would appear possible that investors have been making the ETH and USDT inflows rotate into the original cryptocurrency.
Following these deposits, the supply on exchanges reached 17.98 million ETH for Ethereum and 16.04 billion USDT for Tether. Naturally, this rotation of capital, if one is truly underway, would be a bearish sign for ETH, as it shows investors are looking at the asset as being too risky right now.
USDT, being a stablecoin with its value tied to the US dollar, would not be affected by these exchange inflows. Instead, USDT exchange inflows are generally positive for the market as a whole, as they suggest some investors who had tied up their capital in this stable asset are ready to deploy it elsewhere.
Despite this bullish development Bitcoin has seen recently in terms of its exchange supply, its price has only been consolidating sideways over the past few months.
BTC Price
At the time of writing, Bitcoin is floating around $67,900, down almost 5% over the past seven days.
Looks like the price of the asset has been moving sideways recently | Source: BTCUSD on TradingView