- Despite a drop in all stock markets, the fall in reserves appears to be greater on the US stock markets.
- With macro uncertainty looming, investors shied away from taking bullish bets on BTC.
Bitcoin [BTC] extended the decline for the second consecutive day as the price fell below the important $28,000 level on May 1. However, the king coin reversed the losses to some extent by reaching $28,006 at the time of writing, data from CoinMarketCap revealed.
Read Bitcoin [BTC] Price forecast 2023-2024
While this reflected a decline of more than 2% in the past 24 hours, BTC was up 2.40% on a weekly basis. With the collapse of another major banking institution, First Republic Bank, it remains to be seen whether BTC can go unscathed as it did during the March banking turmoil.
Confidence is eroding in US exchanges
While sentiment around Bitcoin has been upbeat since early 2023, it has hit hurdles in one of the largest financial and crypto markets in the world, the US. According to data from the blockchain analytics company CryptoQuantBTC reserves on US-based exchanges have plummeted since early 2023.
The analysis highlighted that despite a prolonged decline across all exchanges, the fall in reserves appears to be greater in US exchanges. A strong reason behind the decline could be increased scrutiny by US regulators on how crypto assets are processed on centralized exchanges. Earlier this year, Kraken, the second-largest exchange in the US, was forced to cease its stocktaking services after the SEC sued Kraken for a $30 million fine over irregularities in its stocktaking program.
As a result, investors began to prefer self-custodial and offshore exchanges to move their BTC holdings.
Source: CryptoQuant
In addition, data from DeFiLlama highlighted the stark contrast between BTC holdings on US-based trading platforms and offshore platforms. The share of BTC tokens on Binance was over 25% of the total, while on Binance.US, the entity that operates exclusively for US customers, the share was drastically low.
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Similarly, BTC occupied a 31% share of all assets on the Seychelles-based exchange, OKX[OKB] while Hong Kong-based Bitfinex’s reserves were almost 60% BTC tokens.
BTC: Bullish Sentiment Diminishes?
With macro uncertainty looming, investors shied away from taking bullish bets on BTC. Data from Coinglass indicated a sharp increase in short positions versus long positions.
Source: Coinglass
