Retail investors in the cryptocurrency space are showing signs of becoming long-term believers, as Bitcoin (BTC) and Ethereum (ETH) are being withdrawn from centralized exchanges. Recent data indicates that user balances for both top cryptocurrencies have reached four-year lows, leading analysts to view this trend as a positive sign for the future.
During the bull market, user balances for Bitcoin (BTC) and Ethereum (ETH) on centralized exchanges have significantly decreased, according to Glassnode data.
Bitcoin’s value has dropped to under 2.3 million coins, approximately $158 billion, while Ethereum’s value has fallen below 16 million coins, less than $58 billion.
‘Diamond Hands’ And Dollar-Cost Averaging
The decline in exchange balances, which began before the July 2020 bull run, has continued. This indicates a shift in investor behavior, with users choosing to hold onto their coins long-term rather than actively trade them.
Source: Glassnode
This growing confidence may be attributed to various factors, including economic uncertainties, inflation, and the appeal of alternative assets like Bitcoin as a hedge against financial crises.
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 who prefers holding onto their assets rather than seeking quick gains. They adopt a “diamond hands” approach and use dollar-cost averaging to steadily increase their holdings over time.
Total crypto market cap at $2.3 trillion on the daily chart: TradingView.com
Wall Street Whales Dive In, DeFi Heats Up Ethereum’s Engine
The positive sentiment is not limited to retail investors, as institutional giants like BlackRock and Fidelity are increasing demand for Bitcoin with spot Bitcoin ETFs. Additionally, established companies like MicroStrategy have made significant investments in Bitcoin.
For Ethereum (ETH), the optimism stems from its dominance in the DeFi space, where it supports a $68-billion ecosystem, positioning it as a key player in the future of finance.
Bitcoin and Ethereum price action and market cap. Source: Coingecko
Long-Term Value Proposition
With over 25% of Ethereum’s supply currently staked, investors recognize the long-term potential of the platform. The thriving DeFi ecosystem, staking options, and the upcoming shift to proof-of-stake present a positive outlook for Ethereum’s future.
The decrease in exchange balances indicates a growing confidence in the long-term value of these digital assets, as investors choose to hold onto their crypto rather than actively trade it.
Featured image from The Science of Birds, chart from TradingView
