Bitcoin price fundamentals in 'moon mode' as BTC held on exchanges drops

Despite an uneventful month for Bitcoin price, on-chain metrics suggest that Bitcoin may be gearing for an imminent bull run.

Noticeably, the number of Bitcoin held on spot exchanges has been decreasing since the start of the year, according to data from on-chain analytics firms, CryptoQuant, and glassnode.

The dip resembles the accumulation stage of late 2016 which in turn fueled the 2017 bull market that saw Bitcoin price reach its all-time high of $20,089.

"This is one of the few times in my Bitcoin career where the fundamentals are in moon mode, yet the market is not woke to it. They will be by 2021. This is an opportunity I've not seen since mid-2016.".

A depleting reserve of BTC on exchanges is a bullish sign for Bitcoin from a macro perspective.

Some suggest the changing trend may be caused by the growing popularity of DeFi and other liquidity related protocols that have created a demand for tokenized Bitcoin and the liquidity that comes with the asset.

This would still paint a positive picture for Bitcoin as it shows users prefer to receive interest for holding BTC than to take profit.

While there is nearly $1 billion worth of Bitcoin on the Ethereum blockchain through WBTC alone, the tokenized version of Bitcoin only started gaining traction in late June 2020.

Token prices have been plummeting and the total value locked in DeFi protocols continues to drop across the sector and also in the tokenized versions of Bitcoin.

The current reduction in interested DeFi participants has led many analysts to infer that a possible cycling of DeFi and altcoin profits to Bitcoin is underway.