October 13 Daily ‌‌Macro And Crypto Update: Are You Looking At Exchange Reserves?

Most investors are looking at inflation reports along with consumer price index data, but also, as mentioned yesterday, the sentiment for the upcoming earnings season might be slightly tamer now, so people are taking some risk off the table.

BTC also retraced slightly, but the chart paints a very different picture. We’ve had a long correction, from the all-time highs and back down to 30K, and right now, while yesterday’s session might be red, BTC is still hovering a bit above 56K.

A metric I always keep an eye on is the exchange reserves. They might be more or less accurate depending on the enthusiasm crypto traders have for decentralized exchanges. Regardless, they hint whether people are adding coins on trading platforms (to sell) or taking them off (to hodl).

The metric helps us identify if the market is broadly thinking of exiting positions or keeping them medium/long-term.

Right now, we can see those reserves continue to fall, inevitably. It’s heart-warming. And it means that even in the upper 50Ks, investors are holding on for more upside.

To balance this out, I’m looking at it on a longer-term period. In the short term, I think that with everyone talking about breaking new all-time highs and the perps funding rates rising higher and higher, whales might decide to play games and push things down for a while. Liquidations and pain are part of a natural cycle when enthusiasm and bad risk-management go over the top. 

Back to a longer-term basis, a great chart from TheBlock shows the ratio of buy/sell by different market participants. Of course, the buying pressure dominates in the current uptrend, but it’s interesting to see that it’s not just retail. Bank, family offices, and OTC desks are bullish and suggest that institutions may be getting in before it’s too late and before we rally to new all-time highs.

To finish with just one last chart, an interesting tweet from Eric Balchunas shows that while crypto ETFs are/would be a great step forward for the space, it probably won’t represent that big a share of the total trading volume. Most people still want the actual coins. And they’re right!