Data from analytical platforms show the lowest number of bitcoins on centralized exchanges since 2018. What can this mean, and how reliable are the data of blockchain researchers
On-chain metrics are the characteristics of the blockchain that are used in the fundamental analysis of cryptocurrencies. It is difficult to collect such information on your own: to do this, you need to install special software, and then export and analyze a large amount of data. A simpler solution is to use information from sites specially designed for the collection and processing of blockchain data. For example, on-chain analysis of cryptocurrencies on platforms such as Glassnode, CoinMarketCap, Santiment, Coinmetrics, CoinGecko and many others.
One of the most frequently used on-chain indicators is the aggregate balance of bitcoin on centralized exchanges. According to the analytical platform Santiment, which publishes metrics for about 2 thousand cryptocurrencies, this indicator has decreased by more than 40% since March of this year and dropped to a minimum since November 2018.
Experts told RBC-Crypto what a decrease in the number of bitcoins on centralized platforms can say, and how reliable the data of on-chain analysts are.
Indirect indicator
Such a serious reduction in reserves on centralized exchanges can indeed be considered a significant positive signal for the market in the long term, the senior analyst believes Bestchange.ru Nikita Zuborev. According to him, despite the fact that most of the trading is carried out with the help of perpetual futures, that is, without the actual participation of coins, the current reserves of the largest exchanges can indirectly indicate the phase of the market. With a decrease in stocks, it is reasonable to assume positive expectations of large investors, the expert believes: they usually withdraw funds from exchanges without planning to get rid of assets and expecting an increase.
Zuborev explained that from the point of view of blockchain analysis, the assessment of on-chain parameters can be one of the factors indicating a trend reversal. It is not worth ignoring this information, he believes.
“As a rule, large withdrawals of funds are associated with large over-the-counter transactions, that is, indirectly show positive expectations of institutional or large private investors,” the analyst said.