Positive Signs for Bitcoin Traders and Investors
Bitcoin news for traders and investors is indicating positive signs as the cryptocurrency manages to stay above critical levels. Although the current trading environment remains uncertain with sideways price action, new data suggests potential gains.
At the time of writing, Bitcoin is trading at $27,700, experiencing sideways movement in the last 24 hours. However, on higher timeframes, the cryptocurrency has recorded profits, with a 4.4% rally in the previous week.
Bitcoin News and Favorable Price Action
A report from Bitfinex Alpha reveals that the current supply of Bitcoin on exchanges has been decreasing since May 2023. This metric is now at its lowest point in five years, dating back to 2018 when Bitcoin was beginning a new investment cycle.
The report shows that there are approximately 2.03 million BTC on crypto trading venues. The decline in BTC supply is considered positive news for Bitcoin because it has the potential to trigger another bull market. The report states:
“As the bull market began to take off, reserves on exchanges dropped, as crypto prices soared. This seemed to imply that as investors moved their Bitcoin off exchanges, its scarcity on the platform might have driven its price up.”
The chart in the report also demonstrates that the price of Bitcoin reacts to spikes in BTC supply on crypto exchanges. While each bull market has its unique characteristics, they all require a decrease in supply to enter price discovery.
Additionally, the report highlights that a minority of long-term investors did not sell during this crypto winter. These investors continue to hold their coins and have a significant impact on supply/demand dynamics compared to short-term investors who have been shaken off the market.
Less Selling Pressure for Bitcoin
The status quo in the Bitcoin market is evolving, and recent data suggests a potential shift among short-term holders. The Coin Days Destroyed (CDD) metric, which measures supply/demand dynamics, indicates that both long-term and short-term holders are more inclined to hold onto their Bitcoin for longer periods.
Furthermore, these new market dynamics hint at the early stages of a bull market. The report explains:
“The 12-18 month supply holders are now in a position to make a profit on some of their holdings. While this is normal for early bull markets, it is key to note that long-term holder supply remains inactive and even short-term holder supply acquired during the bear market at sub $20,000 prices or even early 2023 at slightly higher prices remains inactive. This shows investor confidence across multiple cohorts…”
Image source: Unsplash, Chart source: TradingView
Hot Take: Bitcoin Supply Decline Hints at Potential Bull Market
The decrease in Bitcoin supply on exchanges is an encouraging sign for traders and investors. As the supply continues to drop, it suggests that more investors are moving their Bitcoin off exchanges, potentially driving up its price due to increased scarcity.
Furthermore, the data indicates that long-term holders are holding onto their coins, while short-term holders are also showing a willingness to hold for longer periods. These shifts in supply dynamics and investor behavior could be early indicators of a bull market.
Overall, while the trading environment remains uncertain, the decreasing BTC supply and changing holder dynamics provide reasons for optimism among crypto enthusiasts.
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