Despite the recent struggling Bitcoin price, on-chain data shows the exchange reserve has just hit the lowest value since September 2018.

As pointed out by an analyst in a CryptoQuant post, the BTC exchange reserve has observed further decline recently, reaching the lowest values in more than 3.5 years.

The “all exchanges reserve” is an indicator that measures the total amount of Bitcoin present on wallets of all exchanges.

When the value of this indicator goes up, it means the supply on exchanges is rising as investors deposit their coins. Such a trend is usually bearish for the price of the crypto as holders usually transfer to exchanges for selling purposes.

On the other hand, the reserve’s value decreasing would imply that investors have been withdrawing a net amount of Bitcoin recently. This trend can prove to be bullish for the coin as it may be an indication of accumulation behavior.

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Now, here is a chart that shows the trend in the price of BTC over the past four years:

As you can see in the above graph, the Bitcoin exchange reserve has been on a downtrend since the last two years.

The metric did observe a temporary upwards trajectory during May 2021, but after a few months of sideways movement the reserve resumed its decline. Now, the indicator has hit its lowest value since September of 2018.

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The exchange reserve is often considered the “selling supply” of the crypto. With its value going down for such a large timespan now, some analysts believe it may be creating a supply shock in the Bitcoin market.

Due to supply-demand dynamics, such a supply shock would be quite bullish for the price of the crypto in the long term.

However, others think the lowering reserves are simply because of the market structure being redistributed, and that exchanges aren’t the only major source of selling pressure today.

Nonetheless, the reserve still trending down despite the recent struggling Bitcoin price amid uncertainty due to the Russia-Ukraine war can be a positive sign of conviction among holders.

At the time of writing, Bitcoin’s price floats around $38.3k, up 1% in the last week. Over the past month, the crypto has gained 3% in value.

The below chart shows the trend in the price of BTC over the last five days.

Bitcoin price in Telegram @btc_price_every_hour

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