Bitcoin #BTC supply on centralized crypto exchanges has dropped to a six-year low, signaling a decrease in selling intentions.
This observation is detailed in the latest #Bitfinex report, which notes that exchange-held BTC has been diminishing for 45 consecutive months, a trend coinciding with Bitcoin hitting a significant resistance level at $45,000.
The ongoing decline in BTC availability on exchanges is seen as a bullish sign, indicating a growing preference among investors to hold their assets longer. Typically, long-term investors or large holders move their BTC to exchanges for selling purposes and withdraw them to cold wallets for extended storage when not intending to sell. This shift suggests a move towards decentralized and self-custody solutions, reflecting a reduced interest in selling.
This reduction in exchange-held BTC, persisting since 2017, significantly influences Bitcoin's volatility, liquidity, and overall market dynamics. Concurrently, Bitcoin deposit transactions to exchanges have fallen to levels not seen since July 2020, pointing towards diminished selling pressure.
Moreover, Bitcoin recently experienced a surge, crossing $44,000, a 170% increase from the year's start. However, it encountered resistance at $45,000, after which it fell to around $41,700. Bitfinex highlights that this resistance level is crucial for medium-term investors who acquired BTC two to three years ago. Overcoming this resistance in December would mark one of Bitcoin's most significant yearly recoveries in percentage terms.
Additionally, the Spent Output Profit Ratio indicates that many holders are currently in profit, staying above one for 44 consecutive days. This metric, along with the reduction in exchange-held BTC and lower deposit transactions, paints a picture of a market leaning towards holding rather than selling, with implications for Bitcoin's future price movements.
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