Daily Bitcoin On-Chain Snap #5

Whales Gobble up Supply with fresh lows in BTC Spot Reserves

The amount of Bitcoin parked on exchanges has reached new year-to-date lows. This is bullish for the asset class, as decreasing spot reserves have served as strong buy signals. It is also known that less supply on exchanges translates to less liquidity, which, in turn, reduces volatility. As such, pay close attention to the July 2021 dip in BTC reserves, as it also coincides with a market bottom.

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Reserve Risk is nearing new year-to-date lows seen in July

Reserve Risk is defined as price / HODL Bank. It is used to assess the confidence of long-term holders, relative to the price of the native coin, at any given point. When confidence is high and price is low, there is an attractive risk/reward (Reserve Risk is low). When confidence is low and price is high, risk/reward is unattractive (Reserve Risk is high). Notice how reserve risk was elevated during May 2021, but has since come down to attractive risk/reward levels.

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