By Ketki Saxena
Investing.com -- In the last 24 hours on Saturday, the exchange balance of Bitcoin saw a significant increase of 10,000 BTC, sparking speculations about possible heightened price volatility among market enthusiasts. Prominent blockchain analytics firm, Glassnode confirmed this development, noting that Bitcoin's exchange netflow on Thursday reached a three-month peak of $9.4 million.
This unexpected surge in Bitcoin's on-exchange reserves has raised concerns among investors about a potential drop in Bitcoin's price, especially considering its recent dip to $29,000. An increase in supply on exchanges often indicates an increased inclination among holders to sell BTC, which could affect its market valuation.
Ali Martinez, BeInCrypto's Global Head of News, citing data from Santiment, warned investors to prepare for possible Bitcoin price volatility spikes. Interestingly, this rise in Bitcoin's presence on exchanges contradicts the recent trend towards reduced exchange balances, a shift attributed to the growing popularity of self-custody solutions.
Just two days before the surge, on Tuesday, Santiment recorded 1.17 million BTC on exchanges – the lowest since November 2018. This indicates a sudden shift in trend from decreasing to increasing Bitcoin balances on exchanges.
Despite Bitcoin's recent rebound to $30,000, long-term holders have consistently added to their BTC positions according to data from IntoTheBlock. Contrary to expectations, this price increment did not attract short-term holders who usually capitalize on surging asset values.
This dynamic sharply contrasts with the scenario in 2019 when Bitcoin's price dipped to $11,000 and resulted in a surge of short-term holders. While the persistent accumulation by long-term holders demonstrates faith in Bitcoin, its price may not react favorably.
Historical data from IntoTheBlock suggests that Bitcoin prices rise when short-term holders are in accumulation mode. However, after reaching a yearly high of $31,500, BTC's price trajectory has remained largely flat.