Retail investors in the cryptocurrency space are showing signs of turning into long-term investors, with the recent exodus of Bitcoin (BTC) and Ethereum (ETH) from centralized exchanges. The latest data shows user balances for both leading cryptocurrencies fell to its lowest levels in four yearsand analysts interpret this move as a bullish signal for the future.
As investors waited for higher prices in the bull market, Bitcoin (BTC) user balances i Ether According to Glassnode data, the value of ETH on centralized exchanges has dropped significantly.
Value Bitcoin dropped to less than 2.3 million coins, or about $158 billion, while Ethereum’s value dropped to less than 16 million coins, or less than $58 billion.
Diamond Hands and Dollar Cost Averaging
The decline in the exchange balance that began before the bull market in July 2020 continues unabated. This suggests a change in investor mentality, with users preferring to hold their coins for the long term rather than actively trading them.
Source: Glassnode
This newfound confidence can be attributed to several factors. The economic turmoil caused by recent market disruptions, combined with rising inflation and other financial disasters, have made alternative assets such as Bitcoin, with confined supply, increasingly attractive as a hedge.
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Some analysts have noticed a up-to-date type of crypto investor. Instead of chasing quick profits, these investors now hold on to their coins through market ups and downs by adopting the principle: “diamond hands” approach. Many people also employ dollar-cost averaging, constantly buying more to build their positions over time.
Total crypto market cap at $2.3 trillion on the daily chart: TradingView.com
Wall Street whales dive, DeFi warms up the Ethereum engine
The positive atmosphere extends beyond retail investors. Institutional giants such as BlackRock and Fidelity are increasing demand for Bitcoin by introducing cash Bitcoin ETFs. Established corporations such as MicroStrategy have also made significant investments in the leading cryptocurrency.
In the case of Ethereum (ETH), the world’s second-largest cryptocurrency and the king of altcoins, the bullish narrative is driven by a different set of factors. Ethereum’s dominance in the decentralized finance (DeFi) space, where it underpins 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 growing DeFi ecosystem, staking options, and the upcoming full transition to proof of stake paints a very positive picture of Ethereum’s future.
The recent decline in exchange balances signals growing confidence in the long-term potential of these digital assets, with investors opting to take their cryptocurrencies off the floor and into a deep freeze.
Featured image from The Science of Birds, chart from TradingView
