Bitcoin [BTC] extended its decline for the second consecutive day as its price dipped below the important $28,000 level on 1 May. However, the king coin reversed the losses to an extent by reaching $28,006 at press time, data from CoinMarketCap revealed.
While this reflected a drop of over 2% in the last 24 hours, on a weekly basis BTC surged 2.40%. With the collapse of another big banking institution, First Republic Bank, it remains to be seen if BTC can go unscathed like it did during the banking turmoil of March.
Trust erodes in U.S. exchanges
While sentiment around Bitcoin has been bullish since the start of 2023, it faced hurdles in one of the biggest financial and crypto markets of the world, U.S. According to data provided by blockchain analytics firm CryptoQuant, BTC reserves at U.S.-based exchanges declined sharply since the beginning of 2023.
The analysis highlighted that despite a long-term decline across all exchanges, the fall in reserves appears to be more significant on American exchanges. A strong reason behind the drop could be increased scrutiny by U.S. regulators on the way crypto assets are handled on centralized exchanges. Earlier this year, Kraken, the second-largest exchange in the U.S., had to cease its staking services after the SEC charged Kraken with a $30 million penalty over irregularities in the staking program.
As a result, investors started to prefer self-custody and offshore exchanges to move their BTC holdings.
Moreover, data from DeFiLlama highlighted the stark contrast between BTC holdings on U.S. based trading platforms and offshore platforms. The share of BTC tokens on Binance was more than 25% of the total, while on Binance.US, the entity which operates solely for U.S. customers, the share was drastically low.
Similarly, BTC occupied a 31% share of all assets on the Seychelles-based exchange, OKX[OKB] while reserves of Bitfinex, based in Hong Kong, consisted of nearly 60% of BTC tokens.
BTC: Bullish sentiment wanes?
With macro uncertainty looming, investors shied away from taking bullish bets on BTC. Data from Coinglass pointed towards a sharp increase in the number of short positions vis-à-vis long positions.
Source: ambcrypto.com
