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Bitcoin Exchange Reserves: Impact of Halving and Increased Adoption
Investors tend to sell their Bitcoin assets on exchanges to convert them into cash when prices rise, leading to an increase in exchange reserves. Conversely, when prices fall, investors may buy Bitcoin at lower prices, leading to a decrease in exchange reserves. When we examine Bitcoin exchange reserves, we see that until 2020, reserves increased while prices were rising. However, since 2020, regardless of whether prices have been falling or rising, exchange reserves have continued to decline consistently. With the upcoming halving event, along with further reduction in supply and increased adoption of Bitcoin by institutional and individual investors, we anticipate a clear decline in reserves. This suggests that in the upcoming Bull Run, Bitcoin will be subjected to more supply shocks compared to previous periods, which will contribute positively to its price.