‘Net neutral’ — Rising Bitcoin exchange balances could be due to Huobi Chinese user block

New research suggests that Bitcoin (BTC), balances increasing on exchanges might not indicate investors are preparing to sell.

TXMC, a Glassnode onchain analyst, revealed the most recent data from all exchanges on December 28.

Binance “absorbing” Huobi orphans

As a rangebound BTC prices combine with increased inflows into exchanges, Decembers end is causing nerves to fray.

Binance is a classic indicator that traders are at minimum preparing for the possibility of price weakness. This has been closely watched as BTC stocks increase.

Despite this, Chinese investors are being blocked from international spot trading venues due to Chinas ongoing crackdown against cryptocurrency trading.

Huobi Global, an international branch of Chinese exchange Huobi stopped mainland Chinese citizens accessing its trading platform on December 15. They will have until December 15th to sell their funds. After that, they will have a one-to-two-year withdrawal window to take them out of their accounts.

A blog post dated closure day states that “Mainland China users cannot sell their holdings or make transactions involving CNY” at 16:00 UTC on December 31, 2021.

“If users have not yet withdrawn sell orders prior to the cessation of the service, all pending sales orders will be cancelled automatically. The withdrawal function will continue to be available for up to two years. A notice will be sent before its closing. Users from Mainland China are advised to manage their digital assets as soon possible.

These users could be simply moving tokens to other platforms, which would explain the rise in Binances balance.

“Binance has been making noise lately, as their exchange balance has increased. Theyre absorbing users, Huobi and other countries as China closes some exchanges at EOY,” TXMC stated on a chart supporting this theory.

“Intriguingly, if you combine Binance and Huobi exchange balances they will be sideways. Net neutral.”

BTC/USD chart: Bitcoin exchange balance Huobi (blue), Binance(green), combined (red). Source: TXMC/Twitter

Liquidity problems

Cointelegraph reported that concerns about a selloff are growing due to holiday periods with lower volumes and smaller markets.

Related: Bitcoin hodlers who are veterans still sell record amounts of BTC, despite 70% gains in 2021

The lack of liquidity could lead to sudden movements, as major institutions players are only expected to return next week.

There are still nuances as retail investors continue to build BTC portfolios while larger investors seem less certain.

Analysis suggests that a mass-sold-off event fueled by retail is also unlikely to occur in the future.