Retail investors in cryptocurrencies are showing signs of becoming long-term believers, with a recent exodus of Bitcoin (BTC) and Ethereum (ETH) from centralized exchanges. Latest data shows user balances for the top two cryptocurrencies have fell to four-year lowwith analysts interpreting the move as a bullish signal for the future.
As investors waited for higher prices in a bull market, user balances of Bitcoin (BTC) and Ethereum (ETH) on centralized exchanges has declined significantly, according to data from Glassnode.
The value of Bitcoin fell to less than 2.3 million coins, or about $158 billion, while Ethereum’s value fell to less than 16 million coins, or less than $58 billion.
“Diamond hands” and dollar cost averaging
The decline in exchange rate balances, which began before the increase in July 2020, continued unabated. This suggests a shift in investor mentality, with users choosing to hold their coins for the long term rather than actively trading them.
Source: Glassnode
This newfound confidence could be attributed to several factors. The economic turmoil caused by recent market disruptions, coupled with rising inflation and other financial calamities, has made alternative assets like Bitcoin, with its capped supply, increasingly attractive as a hedge .
Related reading: Crypto Heist Heats Up: Orbit Chain Hackers on the Move with $48 Million
Some analysts have noticed a new type of crypto investor. Instead of looking for quick gains, these investors are now holding on to their coins through market ups and downs, taking a “diamond hands” approach. Many also use the dollar-cost averaging method, steadily purchasing more to strengthen their positions over time.
Total crypto market cap at $2.3 trillion on the daily chart: TradingView.com
Wall Street whales dive, DeFi revs up Ethereum’s engine
The positive mood extends beyond retail investors. Institutional giants like BlackRock and Fidelity have boosted demand for Bitcoin with the introduction of spot. Bitcoin ETF. Established companies like MicroStrategy have also made significant investments in the leading cryptocurrency.
For Ethereum (ETH), the world’s second-largest cryptocurrency and the king of altcoins, the bullish narrative is fueled by a different set of factors. Ethereum’s dominance in the decentralized finance (DeFi) space, where it supports a $68 billion ecosystem, positions it as a major player in the future of finance.
Bitcoin and Ethereum price action and market cap. Source: Coingecko
Long-term value proposition
With more than 25% of Ethereum’s supply currently staked, it’s clear that investors see long-term value in the platform, market observers noted. The combination of a thriving DeFi ecosystem, the option of staking, and the upcoming full move to proof-of-stake paints a very optimistic picture for the future of Ethereum.
The recent decline in foreign exchange balances reflects growing confidence in the long-term potential of these digital assets, with investors choosing to remove their cryptocurrencies from the trading floor and place them on ice.
Featured image from The Science of Birds, chart by TradingView
