In our last newsletter we spoke about how short-term holders are beginning to take over a larger portion of on-chain activity compared to long-term holders. Another metric that showcases this further is the Bitcoin balance held on Binance addresses compared to Coinbase addresses.
Binance is known to be a crypto exchange mainly for retail investors outside of the USA. Coinbase does have retail but also caters too many larger investors or institutions.
What’s interesting is since March of 2020 the balance on Binance has been increasing steadily while the balance on Coinbase has been decreasing.
As a whole, we know that the market has been moving Bitcoin off exchanges into cold storage. According to the Glassnode founders, the total Bitcoin on exchanges has dropped by around 800k while Binance has seen a 38% increase. Also, Binance has seen 5 times more signups than Coinbase likely due to mass retail outside of the USA joining the platform.
The logical conclusion to this is that Coinbase customers include large investors with bigger amounts of Bitcoin that they need to keep off the exchange for security reasons. Since their sums are much bigger than retail, when they move their Bitcoin it creates a bigger impact like a downward trending total balance on Coinbase (as well as total market).
In contrast, Binance has many retail investors with smaller sums that aren’t as concerned about security and traders that need to keep their Bitcoin on the exchange in order to trade. Also, provides some context as to why Binance customer service has been so awful lately :).
These factors have created an inverse correlation that helps us analysts get a better idea of the current state of the market.
In the news…
Resources I Use
I use Glassnode for all the metrics I track on the Bitcoin network. Their platform is extremely user friendly and fun to use.
Binance is the main exchange to trade the crypto markets.
Coinsquare offers Bitcoin trading in Canadian dollars and is one of the top exchanges in Canada.
Get a free intro course and access to a crypto chatroom with trade alerts and on-chain metrics.
I use Tradingview daily to analyze trading charts and find areas of support and resistance.
Nothing in this article is investment advice. I’m not a financial advisor. Do not make investment decisions based on what is in this article or any other article written by BTC News or Blockedia.