On-chain data shows that the Bitcoin reserves of major exchanges worldwide are rapidly declining, leading to a further contraction in market supply. Long-term holders are entering 'HODL' mode, firmly holding onto their Bitcoins, becoming an important force driving the surge in coin prices.
According to a report released on Sunday by 10X Research, the Bitcoin reserves of exchanges have fallen to historical lows, indicating that the number of Bitcoins available for purchase in the market is rapidly depleting, leading to a sharp rise in supply pressure.
The report also mentions that this situation is in stark contrast to the end of summer this year when a large amount of Bitcoin flowed into exchanges, temporarily replenishing reserves. However, there is currently no similar 'blood replenishment' phenomenon in the market, and the issue of Bitcoin supply shortage is becoming increasingly severe.
Due to the overwhelming majority of investors believing in the principle of 'Not your keys, not your coins,' they usually transfer cryptocurrencies to cold wallets for safe storage during times of high long-term belief, facilitating long-term holding.
The market generally believes that when investors withdraw large amounts of Bitcoin from exchanges, it also means a significant removal of supply from the open market, leading to a tightening of supply and thus increasing the pressure to buy. Therefore, the phenomenon of large amounts of funds flowing out of exchanges is often seen as a 'bullish indicator.'
Analysts point out that the recent supply shortage of Bitcoin is illuminated by several positive factors, including the improvement of the global policy environment and increased investor confidence in cryptocurrencies, suggesting that market conditions may continue to improve next year.
One of the most eye-catching news is that the elected President of the United States, Donald Trump, has promised to establish a national Bitcoin reserve and protect the cryptocurrency mining industry while formulating industry-friendly policies. These policy proposals not only pushed the Bitcoin price close to the historical high of $100,000 but also made Bitcoin once again regarded as an asset with value storage function in the eyes of investors.
On-chain data further indicates that there are currently no signs of mass selling of Bitcoin by long-term holders. According to an analysis chart combining 10X Research and Glassnode data, the available supply of Bitcoin on exchanges (blue line, 30-day moving average) continues to plummet.
So far, only three major exchanges, Bitfinex, Binance, and Coinbase, have Bitcoin reserves that can meet buyer demand, while smaller exchanges are facing increasing liquidity challenges, which may further exacerbate price volatility.
At the same time, institutional investors' demand for Bitcoin financial products (such as ETFs) continues to grow, further intensifying supply pressure in the market. The report states that as the demand from retail and institutional investors heats up simultaneously, the Bitcoin supply shortage will further drive up prices, moving towards a new historical peak.
"Institutional demand surges, exchange reserves are in crisis! Is a new wave of Bitcoin price increase brewing?" This article was first published on (Blockk.com).
