Investors have been withdrawing funds from exchanges and stablecoin reserves are increasing.
Bitcoin experienced a brief pullback at the end of this week’s trading, briefly falling below $87,000 after hitting its latest all-time high of nearly $94,000 on Wednesday.
However, the worst may be over as the asset has recovered most of its losses and is currently trading above $91,000. Meanwhile, on-chain factors suggest that there is still a lot of potential for its rally to eventually challenge the coveted $100,000 level.
BTC falls on exchanges
One of the indicators to determine the immediate selling pressure of a cryptocurrency is whether it is easy to sell quickly, which is reflected in the amount of reserves on exchanges. Essentially, the less reserves on the trading platform, the less immediate selling pressure there is for the underlying asset.
In this case, investors are withdrawing funds, often into cold storage, in preparation for a continuation of the current trend.
CryptoQuant data shows that the BTC reserves of exchanges have continued to decline recently, especially since Donald Trump won the 24th U.S. presidential election last week. In fact, Bitcoin reserves have fallen to a six-year low of less than 2.6 million.
“This move reduces the supply available for immediate sale, creating buying pressure in a tight supply environment. As a result, the market may see a trend of appreciation in the value of Bitcoin, especially if demand remains stable or grows.” – their analysis reads.
The report further states that these withdrawals from exchanges reinforce investors’ view that Bitcoin is a “store of value amid global economic uncertainty and high inflation.”
Removing BTC from trading platforms could lead to a “more volatile but resilient BTC market” with less selling pressure and “a dominance of long-term holders, which could open up space for new price peaks.”
Stablecoins are on the rise
Market liquidity has improved in recent weeks, especially after Trump’s victory, which is another factor that could bode well for further price gains in the cryptocurrency market. After all, stablecoins offer a simple and easy way for investors to enter the market and allocate funds to Bitcoin and altcoins.
CryptoQuant’s dashboard shows that over $3 billion in USDT alone has entered cryptocurrency exchanges since the election, a three-year high. The chart below shows how the increase in the number of stablecoins in existence and on trading platforms coincides with the rise in BTC prices.
