Bitcoin (BTC) balances ascension on exchanges may not be a sign of investors preparing to sell, new research argues.

Unveiling the latest information from across exchanges on December. 28, Glassnode on-chain annotator TXMC pointed the finger at fresh changes in China for rising balances elsewhere.

Binance "absorbing" orphaned Huobi users

The finish of December is seeing nerves fray as a rangebound BTC toll combines with increased inflows to exchanges.

A archetype indicator that traders are at to the lowest degree arming themselves to de-risk in the result of further price weakness, Binance has been particularly closely eyed every bit its BTC stocks rise.

At the same time, all the same, Chinese investors are beingness frozen out of international spot trading venues in the aftermath of China'due south ongoing crackdown on cryptocurrency trading.

Huobi Global, the international off-shoot of Chinese substitution Huobi, stopped mainland Chinese citizens from accessing its trading service on Dec. 15. They at present have until the end of the month to sell funds, after which a one- to two-year withdrawal window will be available for them to remove them from their accounts.

"From 16:00 (UTC) on Dec 31, 2022, Mainland Cathay users tin no longer sell their holdings or conduct any transactions involving CNY," a web log mail service issued on closure day reads.

"If users accept yet to withdraw sell orders before the cessation, the system volition automatically cancel all pending sell orders. The withdrawal office will remain available for 1 to 2 years, and notice volition be given ahead of its closure. Mainland China users are advised to handle their digital assets as soon as possible."

As a result, those users could simply exist moving tokens to other platforms, explaining the increase in Binance's balance.

"Binance has fabricated dissonance lately every bit their exchange balance has risen. My theory is they're absorbing users from Huobi and elsewhere as China shuts downwards some exchanges at EOY," TXMC commented on a chart supporting the idea.

"Curiously, if you combine Binance + Huobi substitution balances, they're sideways. Internet neutral."
Bitcoin exchange balance vs. BTC/USD chart. Huobi (blueish), Binance (green), combined (red). Source: TXMC/Twitter

Liquidity challenges

As Cointelegraph reported, concerns over a sell-off are being heightened due to the holiday menstruation having lower volumes and shallower markets overall.

Related: Veteran Bitcoin hodlers are still selling tape low amounts of BTC despite 70% gains in 2022

This lack of liquidity could exacerbate any sudden moves, with major institutional players only returning next calendar week.

Nuances remain, however, as retail investors continue building BTC portfolios, while larger investors appear less certain.

A retail-fuelled mass sell-off event is likewise thought to exist an unlikely occurrence going forward, analysis says.