Bitcoin
Bitcoin and Ethereum lead exchange migration
Retail investors in the cryptocurrency space are showing signs of turning into long-term believers, with a recent exodus of Bitcoin (BTC) and Ethereum (ETH) from centralized exchanges. The latest data shows that user balances for both major cryptocurrencies fell to four-year lowswith analysts interpreting the move as a bullish sign for the future.
As investors waited for higher prices in a bull market, Bitcoin (BTC) users’ balances and Ethereum (ETH) on centralized exchanges has dropped significantly, according to data from Glassnode.
The value of Bitcoin it fell to less than 2.3 million coins, or about $158 billion, while the value of Ethereum fell to less than 16 million coins, or less than $58 billion.
‘Diamond Hands’ and Dollar-Cost Averaging
The decline in foreign exchange balances, which began before the July 2020 bull run, has continued unabated. This suggests a shift in investor mindset, with users opting to hold their coins for the long term rather than actively trading them.
Source: Glassnode
This new confidence can be attributed to several factors. The economic turmoil caused by recent market disruptions, along with rising inflation and other financial calamities, has made alternative assets like Bitcoin, with its limited supply, increasingly attractive as a hedge.
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Some analysts have noticed a new type of investor in crypto. Instead of seeking quick gains, these investors are now holding onto their coins through market ups and downs, adopting a “diamond hands” approach. Many are also using dollar-cost averaging, buying more and more to build their positions over time.
Total crypto market cap at $2.3 trillion on the daily chart: TradingView.com
Wall Street Whales Dive, DeFi Heats Up Ethereum Engine
The positive vibe goes beyond retail investors. Institutional giants like BlackRock and Fidelity have been increasing demand for Bitcoin through the introduction of spot Bitcoin ETFs. Established corporations like MicroStrategy have also made significant investments in the leading cryptocurrency.
For Ethereum (ETH), the world’s second-largest cryptocurrency and the king of altcoins, the bullish narrative is fueled by a different set of factors. Ethereum’s dominance in the Decentralized Finance (DeFi) space, where it supports a $68 billion ecosystem, positions it as a key player in the future of finance.
Bitcoin and Ethereum price action and market cap. Source: Coingecko
Long-term value proposition
With more than 25% of Ethereum’s supply currently staked, it is clear that investors see long-term value in the platform, market observers noted. The combination of a thriving DeFi ecosystem, the option of staking, and the upcoming full switch to proof-of-stake paints a very optimistic picture for the future of Ethereum.
The recent drop in exchange balances signifies growing confidence in the long-term potential of these digital assets, with investors opting to withdraw their cryptocurrencies from the trading floor and place them in the freezer.
Featured image from The Science of Birds, chart from TradingView