Bitcoin Exchange Activity Declines Sharply Since July 2022 – Accumulation Or Apathy?

Bitcoin is trading above all-time highs once again, having surged past the $110,000 mark just hours ago. The breakout signals strong bullish momentum as BTC enters a fresh price discovery phase. Investor sentiment remains upbeat, with many analysts speculating on how far this rally could extend. While some foresee an extended bull run powered by macro trends and institutional flows, others caution that overheated levels could trigger sharp pullbacks.

One critical piece of data drawing attention comes from CryptoQuant: since the collapse of Luna in 2022, average weekly trading volumes for the BTC/USD pair on centralized exchanges (CEXs) have sharply declined. From a peak of 2.9 million BTC traded weekly in July 2022, volumes have fallen to just 426,000 BTC as of yesterday’s session.

This drop in exchange activity suggests two key dynamics. First, a reduced supply of BTC on exchanges often correlates with long-term holding behavior, typically a bullish signal. Second, lower sell-side liquidity may increase volatility, especially in the face of rapid price movements. As Bitcoin continues its upward march, the absence of significant volume on CEXs could either accelerate gains or magnify corrections depending on investor reaction in the days ahead.

Bitcoin Low Exchange Volume Adds Fuel To Bullish Outlook

Bitcoin is showing resilience in the face of macroeconomic headwinds. While U.S. equities dipped yesterday due to rising yields in Treasury Bonds, Bitcoin climbed steadily, signaling that market participants may be rotating capital into hard assets amid uncertainty. This relative strength highlights BTC’s appeal as a hedge, particularly when traditional markets waver.

However, despite the bullish momentum, a key hurdle remains at the $115,000 level. Breaking above this resistance would confirm the next phase of the rally and open the door to higher price discovery. Conversely, a failure to hold above current levels around $110,000 could invite a swift correction back to previous support zones. Traders are watching closely, as volatility could rise quickly.

Top analyst Axel Adler added meaningful context to the broader trend. According to Adler, after the Luna collapse in 2022, weekly trading volumes for the BTC/USD pair on centralized exchanges (CEXs) have plummeted—from 2.9 million BTC in July 2022 to just 426,000 BTC this week.

This long-term decline in exchange activity is viewed as a bullish structural shift. It signals a move toward long-term holding behavior and a tightening of available supply. With fewer coins circulating on exchanges, sell-side pressure is reduced, creating a supportive backdrop for continued upward price action.

BTC Price Action Shows Strong Momentum

Bitcoin is trading at $110,855 after briefly reaching $111,163, signaling strong upward momentum and continuation of the bullish trend. On the 4-hour chart, BTC has consistently posted higher lows and higher highs since the bounce off the $100K support level on May 15. The recent breakout above the $108K resistance level triggered a surge in buying volume, pushing BTC into uncharted territory.

Key technical indicators support the bullish bias. The 200-period simple moving average (SMA) at $98,024 and the 200-period exponential moving average (EMA) at $98,826 are trending upward, confirming strong underlying trend support. Volume spikes in the last two sessions also suggest strong conviction from buyers as BTC entered price discovery.

However, the price is beginning to show signs of potential exhaustion. The latest candles exhibit long wicks on the upper side, hinting at selling pressure near local highs. If BTC fails to maintain momentum, a retest of the $108K breakout level could occur. Immediate support lies around $103,600, with $100K as the psychological floor.

Featured image from Dall-E, chart from TradingView