Bitcoin Supply on Exchanges Reaches 6-Year Low
The supply of bitcoin (BTC) on centralized crypto exchanges has reached its lowest level in six years, indicating a decline in selling intent. This is according to the latest edition of the Bitfinex Alpha report, which reveals that exchange-held BTC has seen a continuous decrease in supply for 45 months. Interestingly, this decline coincided with BTC hitting a significant resistance level at $45,000.
Decline in BTC Supply on Exchanges as a Bullish Sign
The decrease in BTC supply on exchanges is seen as a positive sign as it demonstrates that investors are more inclined to hold onto their assets rather than sell them. It also suggests a potential shift towards decentralized and self-custody solutions. Since this reduction in exchange-held BTC began in 2017, it has had a significant impact on the asset’s volatility, liquidity, and overall market dynamics. Additionally, BTC deposit transactions to exchanges have dropped to multi-year lows, indicating reduced selling pressure.
BTC Hits Resistance at $45K
While the supply of BTC on exchanges decreases and deposit transactions decline, data shows that many holders are currently in profit. Bitcoin’s recent surge pushed its price above $44,000, representing a 170% increase since the beginning of the year. However, it faced resistance at $45,000 and has since fallen to around $41,700. Bitfinex analysts note that breaking past this resistance level would be significant for medium-term investors who bought BTC between two to three years ago.
Hot Take: Bitcoin Supply on Exchanges Drops to 6-Year Low
The decreasing supply of bitcoin on centralized exchanges is an encouraging sign for the crypto market. It indicates that investors are choosing to hold onto their BTC rather than sell it, potentially signaling a shift towards self-custody solutions. This trend has been ongoing since 2017 and has had a significant impact on the asset’s volatility and liquidity. With BTC deposit transactions to exchanges also at multi-year lows, the selling pressure on the market is reduced. However, the recent resistance at $45,000 poses a challenge for BTC’s price growth. Breaking past this level would be a significant milestone for medium-term investors.
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