Exchanges Are Running Dry
We are now half of the way towards the next halving, in around 700 days bitcoin block rewards will be cut from 6.25 to 3.125 and with that supply squeese, we normally see a price run-up that triggers the next bull run. While very few consider this and focus on short-term pricing as a result, those who see what's coming are starting to consolidate their positions as the price trades sideways.
I expect the sideways and range-bound trading to continue for the next two years and there might be several capitulations as people grow impatient and sell or try to leverage trade these ranges.
The 2500 - 3000 satoshis to a dollar range will look like a bargain once 2024/25 roles are around and you probably won't bag 1000 sats for a dollar by then.
Bitcoin on exchanges
To look for proof that consolidations are taking place, you only have to look at what exchanges are doing. Bitcoin on exchanges has nose-dived from a peak of nearly 3.3 million coins to close to 2.4 million coins a rate lower than 2018 and when you consider that in the last 4 years 1.3 million new bitcoin was minted it just goes to show that the price is not reflecting the reduction in the float.
Consider the fact that most normies don't cold storage or self custody and you can track that as people who are likely to sell.
As more people realise the safety of self custody and the risk of exchange rehypothecation, we will only see more supply pulled offline and exchanges will start to run dry.
Available #Bitcoin on exchanges keeps on nose diving! pic.twitter.com/2lnqWLRRsp
— Crypto Rover (@rovercrc) May 5, 2022
Crypto.com limiting dumping
Look at notifications on crypto.com these days trading a shitcoin for bitcoin, they're actively notifying you that this is a low liquidity trade and limiting trade volumes as not to freak out the market if their order book should implode from 1 or 2 big sales.
Coinbase taking out bitcoin loans
As for coinbase the grand daddy of shitcoin casinos, they've already started to backstop their BTC shortcomings by taking out a bitcoin loan. Coinbase is obviously in need of bitcoin liquidity for some reason, probably to mark make and backstop all their shitcoin pairs, hoping they can make fees to build up their treasurey over time.
Coinbase And Goldman Sachs Join Forces On First Bitcoin-Backed Loan https://t.co/9y2eKaKzzz
— Michael (@val5linx) May 6, 2022
Yields on bitcoin have dropped
Another sign of bitcoin is hard to come by is the rates on bitcoin interest accounts. We've seen BlockFi, Luno, and LEDN reduce their interest rates on bitcoin as they can't clip the GBTC premium anymore or use futures to pocket that contango trade.
Leverage trading has also slowed down which is a huge income stream for exchanges, which they use to pay back their interest obligations along with fees they earn through their market making.
Over the last few months, changing market conditions have led to interest rates for savings accounts in both Bitcoin and USDC going lower across the industry.
— Mauricio (@cryptonomista) May 4, 2022
At @hodlwithLedn we always like to be transparent about these changes and how they impact the interest rates for Savers
The way I see it is those listening to the noise will be distracted by the price while those looking at the signal will be buying while the liquidity is still there to acquire at these prices. Eventually, as supply tightens, and the float dries up, prices are forced upward.
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