• The Bitcoin Exchange Reserve Ratio for US and offshore platforms has been declining recently.
• The value of the metric has been going down since the first half of 2022.
• This suggests that the supply on US-based exchanges is decreasing compared to that on foreign platforms, especially during major crashes.
What Is The Bitcoin Exchange Reserve Ratio?
The Bitcoin exchange reserve ratio is an indicator measuring the total amount of Bitcoin currently sitting in wallets of a centralized exchange or group of such platforms. It compares the reserves of two sets of exchanges i.e., American and foreign ones, to give us an idea about how much deposits (or withdrawals) are being made on each set relative to one another.
Recent Trend Of The Exchange Reserve Ratio
According to a CryptoQuant post, the BTC reserve ratio between US and offshore platforms has been decreasing lately. This means that there’s higher growth in supply on global exchanges than on American ones at present. The following chart shows the trend in this metric over last couple of years:
Implications Of Declining Exchange Reserve Ratio
The decreasing exchange reserve ratio implies that investors are withdrawing their funds from US-based exchanges more than they are depositing them into these platforms. This could be due to fear, uncertainty, or doubt around certain events which leads people to move their coins from centralized exchanges onto cold storage wallets or other custodial services for safe keeping. Moreover, major crashes may also cause temporary accelerations in this drawdown as some significant players go bankrupt and FUD spreads around the market leading people to exit out their positions at once.
To sum it up, recent data suggests that Bitcoin exchange reserve ratio for US versus offshore platforms has been falling off since first half of 2022 indicating a decrease in supply on American exchanges relative to foreign ones. This could mean investors are choosing not to trust centralized services as much anymore which is why they are taking out their funds more often than depositing them into these platforms right now.