Bitcoin Supply Shock: The Hidden Forces Behind the New Price High
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Bitcoin reserves hit historic lows
Recent data shows that the reserves of Bitcoin on exchanges have fallen to a historical low of 2.4 million coins. This change starkly contrasts with the ongoing price increase, revealing that a potential 'supply shock' is shaping market trends.
Changes in exchange reserves:
At the beginning of 2024, Bitcoin reserves were approximately 3 million coins, but by the end of the year, they had decreased by nearly 20%.
Main reason: Institutional investors tend to 'HODL' (hold on for dear life), transferring assets out of exchanges in pursuit of future appreciation.
CryptoQuant analyst Kripto Baykus points out that this behavior indicates investor confidence in Bitcoin's long-term potential. He states: 'The holding patterns of institutional investors are gradually reinforcing a bullish outlook for Bitcoin.'
Price performance and demand analysis
Price trend:
At the beginning of 2024, Bitcoin's price was around $40,000; it then gradually climbed to a high of $104,000 in November.
Demand indicators:
Another CryptoQuant analyst, Yonsei Dent, assesses North American market demand through the Coinbase premium index. Although Bitcoin's price rose from $94,000 to $106,000, this index showed a downward trend, indicating that the recent price surge was not directly driven by demand from the U.S. market.
Future outlook
Supply shock: The decreasing number of available Bitcoins on exchanges will create long-term price support as demand continues to grow.
Demand distribution: Short-term fluctuations in North American market demand do not alter the overall upward trend, but caution is needed regarding whether buying power in other regions is weakening.
Mid-term challenges: Although Bitcoin is in a strong upward channel, future price breakthroughs will still require more demand momentum for support.
The current price surge of Bitcoin reflects not only investor confidence in its long-term potential but is also influenced by reduced supply and fluctuating demand. After breaking through historical highs, the market may welcome a new volatility window, but the overall trend remains positive.
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