US Platforms Regaining Bitcoin Dominance: Is This Bullish?

On-chain data shows the US-based platforms have recently been expanding their Bitcoin holdings. Here’s what this could mean for BTC’s price.

Bitcoin US To The Rest Reserve Ratio Has Been On The Rise Recently

As explained by CryptoQuant founder and CEO Ki Young Ju in a new post on X, BTC appears to have been shifting from other countries to American exchanges recently.

The on-chain metric of interest here is the “US to The Rest Reserve Ratio,” which keeps track of the ratio between the total amount of Bitcoin that the US-based central entities like exchanges and funds are holding and that the platforms in the rest of the world own.

When the value of this metric goes up, it means the cryptocurrency is moving to US-based platforms from those in the rest of the world. On the other hand, it registering a decline suggests the dominance of the global platforms is rising.

Now, here is a chart that shows the trend in the Bitcoin US to The Rest Reserve Ratio over the past decade:

The value of the metric appears to have been riding an uptrend in recent months | Source: @ki_young_ju on X

As displayed in the above graph, the Bitcoin US to The Rest Reserve Ratio had observed a sharp plunge during the 2022 bear market and had hit a low in 2023. This would suggest that a massive shift in the BTC supply had taken place, with tokens moving into the wallets attached to offshore platforms.

In this year 2024, however, the indicator appears to have finally seen a turnaround, as its value has been heading up instead, meaning that the American platforms are regaining some of their lost dominance.

The main reason behind this trend is simple: the spot exchange-traded funds (ETFs). The spot ETFs are financial instruments that provide exposure to Bitcoin’s price movements through a means that’s familiar to traditional investors.

These funds finally gained approval from the US Securities and Exchange Commission (SEC) at the beginning of this year and have since gained some popularity.

The US to The Rest Reserve Ratio naturally also includes these new funds into its calculation and since they didn’t exist before, it makes sense that its value would register an uptick after their advent this year.

Now, what could this uptrend mean for Bitcoin, if anything at all? From the chart, it’s visible that the last two times that BTC observed a significant uptrend in the indicator happened to coincide with the last two bull runs.

The rally to the price all-time high (ATH) earlier in the year, too, saw a rapid rise in the indicator, albeit its scale was much smaller than the growth observed in the leadup to the 2017 and 2021 bull runs.

Given the past precedence, it’s possible that Bitcoin may benefit from this shift of supply to the American exchanges this time as well.

BTC Price

After observing a continuation of its recent bullish momentum during the past day, Bitcoin has finally returned above the $65,000 level.

Looks like the price of the coin has been on the rise for a while now | Source: BTCUSDT on TradingView

Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com