The analytics firm Santiment has explained that the current Bitcoin rally could still have some legs left, based on this on-chain trend.
Bitcoin & Ethereum Leave Exchanges, While Tether Sees Deposits
In a new post on X, Santiment has discussed the recent trends in the Supply on Exchanges for the three largest assets in the cryptocurrency sector: Bitcoin (BTC), Ethereum (ETH), and Tether (USDT).
The “Supply on Exchanges” here refers to a metric that keeps track of the percentage of the total circulating supply of any given coin that’s currently sitting in the custody of the centralized exchanges.
When the value of this metric goes up, it means that the investors are depositing their coins to these platforms currently. On the other hand, a decline implies net withdrawals are occurring on the exchanges right now.
What these trends suggest for the given asset and the sector as a whole depends on the type of cryptocurrency it is in question. In the case of volatile coins like Bitcoin and Ethereum, net deposits can be a sign that investors are looking to sell these assets, which can naturally have a negative impact on their prices.
Since the altcoins generally only see a rotation of capital through these largest cryptocurrencies, a bearish trend for them can have a domino effect on their prices as well.
Withdrawals for these volatile coins, on the contrary, can be bullish for the market, as they imply the investors are perhaps looking to hold onto their tokens for extended periods.
Now, here is a chart that shows the trend in the Supply on Exchanges for Bitcoin and Ethereum over the past year:
Looks like both of these metrics have registered a decline recently | Source: Santiment on X
As displayed in the above graph, the Bitcoin and Ethereum Supply on Exchanges have continued their downtrend following the spot ETF approvals for BTC a few weeks back.
In the same chart, Santiment has also attached the data of the indicator for Tether. It would appear that while BTC and ETH have seen supply move off exchanges, USDT has observed net deposits.
The largest stablecoin in the sector has witnessed around 4% of its entire supply shifting to these platforms over the last five weeks, which has taken the indicator’s value to the highest point in almost ten months.
Investors use stablecoins whenever they want to escape the volatility associated with assets like BTC and ETH. Such holders who seek safe haven in these fiat-tied tokens…
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