Investors might be keeping their bitcoins prior to halving in May, at which point rewards for each block mined will be reduced, CoinDesk reported.
The seven-day moving average for all bitcoin held in exchange addresses dropped to the lowest point as of June 2019 to 2,214,365 in mid-April. The average on Tuesday was almost 8 percent lower from a 2,404,786-high back in January.
The heightened holding levels might have to do with a bullish forecast connecting a reduction in rewards for bitcoin mining. Rewards for each block mined will be cut to 6.25 BTC from 12.5 BTC through a process designed to curb inflation. At the same time, the drop in exchange balances hints at a move to holding strategies for the longer haul.
Investors typically take coins out of the exchanges to have in their wallets at a time that prices are forecasted to be on the uptick. They typically bring their balances in exchanges to gear up for a sale at a time when a decrease in price is forecasted or in the midst of tumbling prices. The price of bitcoin was $6,638.27 as of 7:53 p.m. Eastern Daylight Saving Time on Wednesday (April 15).
In other news, gold might be performing better than bitcoin, but inflation may bolster the digital currency, CoinDesk reported.
Bitcoin is lower by just more than 4 percent on the year, while gold is higher by 14 percent. The report, however, noted that bitcoin seems to be trading in tandem with forecasts for inflation.
Research firm Coin Metrics examined the digital currency’s correlation with the five-year forward expectation rate that the Federal Reserve Bank of St. Louis publishes. In its report, the organization said, “there is some evidence that correlation between Bitcoin and gold may be starting to increase, at least slightly. Although the short-term is still uncertain amidst the global pandemic, this could potentially be a long-term inflection point for Bitcoin if federal banks around the world continue to inject money into the global economy at historic rates.”