As pointed out by an analyst in a CryptoQuant post, 50k BTC in net outflows has exited exchange wallets over the past week.
The “all exchanges reserve” is an indicator that measures the total amount of Bitcoin stored in wallets of all centralized exchanges.
When the value of this metric goes up, it means the supply on exchanges is rising as investors deposit a net amount of coins. Such a trend may be bearish for the price of the coin as holders usually transfer to exchanges for selling purposes.
On the other hand, the reserve’s value decreasing implies that a net amount of Bitcoin is exiting exchange wallets at the moment. This kind of trend when sustained over a period can prove to be bullish for the coin’s price as it may be a sign that investors are accumulating.
The exchange reserve has traditionally been considered the “selling supply” of the coin. As it has been shrinking for a while now, the effect on the price should be positive due to supply-demand dynamics.
Some have referred to this decline as creating a “supply shock” in the market. However, recent data suggests that the reserve is no longer the main source of selling pressure, coins exiting from exchanges have instead just shifted into investment vehicles like ETFs.
Nonetheless, the reserve declining does reduce part of the selling supply so the net effect of such a trend may still be bullish.
At the time of writing, Bitcoin’s price floats around $41k, up 5% in the past week. Over the last month, the crypto has lost 6% in value.