Bitcoin balance on exchanges hits four-year low, analysts predict bottom could come in Q4

The crypto market continues to fall as the new week begins. Data from Bitpush Terminal shows that Bitcoin's trend is consistent with that of the U.S. stock market, falling below $21,000 at one point, and Ethereum's decline has further widened. According to Glassnode data, the Bitcoin balance on centralized crypto exchanges has reached a four-year low of 2,342,202.837, indicating that users have been withdrawing their Bitcoin from exchanges.

The Arcane Research team found that after the collapse of crypto lending platforms such as Celsius , Babel Finance and Vauld , Hodlers (long-term coin holders) have been moving Bitcoin out of exchanges in an unprecedented manner. These events not only damaged the reputation of the lending platforms, but also had an indirect impact on the sentiment of Hodlers.

Data tracked by Arcane Research shows that in June, exchanges saw a net outflow of 119,000 Bitcoin, the highest outflow since November 2020. July also saw large outflows, with 96,000 BTC withdrawn from exchanges. Exchange outflows continued in August, with a net withdrawal of 65,000 Bitcoin in the first 22 days of the month.

Analysts said: "The large outflow of Bitcoin from centralized trading platforms indicates that cryptocurrency holders have less trust in exchanges and lending platforms than before. Bitcoin is increasingly being moved into cold storage, which is further indicated by the recent sales growth seen by hardware wallet manufacturers such as Ledger and Trezor."

Rekt Capital, a popular analyst on Twitter, shared his predictions on when the market will reach the bottom of this cycle. He believes that based on the previous trend of Bitcoin, the crypto market may reach its lowest point in the fourth quarter of this year.

In 2015, Bitcoin lingered for 547 days before halving. In 2018, a similar cycle lasted 517 days. Rekt Capital believes that if these data are extrapolated to the Bitcoin trend before the upcoming halving in April 2024, the bottom should appear in the fourth quarter.

Bitcoin fell more than 10% last week, its biggest drop in two months, and sentiment looked fragile as crypto markets retreated along with U.S. stock futures as traders grew pessimistic about the prospect of further rate hikes.

According to the latest weekly fund report released by CoinShares , in the week ending August 21, crypto funds experienced a small outflow, with a total outflow of US$9 million and a trading volume of only US$1 billion, a year-on-year decrease of 55%, falling to the second lowest level this year. Analysts said that this shows that investors are less enthusiastic about participating and the crypto market downturn is still continuing.

The U.S. Federal Reserve will hold its annual economic symposium in Jackson Hole, Wyoming on Friday, and the market seems to agree that Powell will make hawkish remarks during the meeting. David Duong , head of institutional research at Coinbase , pointed out in his weekly market commentary that Bitcoin's daily technical chart has turned bearish and the cryptocurrency may continue to fall in the short term. He said: "BTC may retest the support levels of $20,830 and $19,230 in the coming weeks."