On Wednesday (September 18), Bitcoin continued to hold the $60,000 mark under the technical outlook of a double bottom bullish. A large inflow of Bitcoin spot ETFs on Wall Street boosted buying in the cryptocurrency market. Cryptocurrency exchange reserves fell to 2018 levels, indicating that investors began to hoard Bitcoin in the hope of future profits. US Republican presidential candidate Donald Trump stated that cryptocurrency is a very strong market.
U.S. Bitcoin spot ETFs saw net inflows of $403 million in the week ending September 13. The trend continued into this week, with $12.8 million in inflows into Bitcoin spot ETFs on Monday, bringing ETF net reserves to $17.3 billion, according to Farside Investors data.
The inflows coincide with accelerated short liquidations in derivatives markets over the past 24 hours.
CoinGlass data shows that short traders (people who bet on a fall in the cryptocurrency market) suffered a total of $78.94 million in liquidations in the past 24 hours. In contrast, long traders suffered more than $44.45 million in liquidations during the same period.
Bitcoin liquidations reached $46.16 million, of which more than $36.5 million worth of leveraged short Bitcoin positions were liquidated. When short positions are liquidated, traders who bet on a price drop are forced to sell their positions, typically at a loss.
CoinTelegraph noted that from a technical perspective, the cryptocurrency market cap is trading within a prevalent “double bottom” channel pattern, indicating that it could continue to show bullish price action.
The double bottom scenario was somewhat confirmed by the fact that the cryptocurrency market cap fell below $1.7 trillion on August 5, then quickly recovered to $2.24 trillion and returned to the $1.81 trillion level on September 6. If this pattern holds, the cryptocurrency market cap could rebound to $2.42 trillion.
According to Samurai Trading Academy’s research on popular chart patterns, caution should be exercised when trading double bottom patterns as they carry a certain degree of risk of failure of approximately 21.45%.
CryptoSlate reported that according to CryptoQuant data, the amount of Bitcoin held by cryptocurrency exchanges fell sharply in September, falling to the level of mid-November 2018.
Since the beginning of this month, Bitcoin exchange reserves have fallen from approximately 2.62 million Bitcoins to 2.58 million Bitcoins. This is a drop of nearly 38,000 Bitcoins in just two weeks, which is a continued trend of accelerating Bitcoin outflows from exchanges.
The annual trend shows an even bigger drop, with reserves having fallen by around 430,000 BTC since the beginning of the year.
A decline in Bitcoin exchange reserves usually indicates that investors are moving their holdings off exchanges and choosing to store them in personal wallets for the long term. This move is often interpreted as a sign of confidence in Bitcoin's future price potential, as it reduces the immediate supply available for trading, potentially setting the stage for a supply crunch.
The return of foreign exchange reserves to 2018 levels is particularly instructive. In November 2018, Bitcoin emerged from a bear market and investors began to hoard Bitcoin in anticipation of future profits. Today, the similarities are obvious, with investors again withdrawing Bitcoin from exchanges, which may indicate that the current market cycle has entered a hoarding phase. This move may mean that market participants are preparing for major price fluctuations caused by the scarcity of available Bitcoin on exchanges.
Low levels of foreign exchange reserves suggest that the market prefers long-term holding rather than short-term trading, and such behavior can increase price volatility, especially when demand surges and supply is constrained.
Bitcoin traders are also keeping a close eye on the progress of the US presidential election. With less than 50 days to go, Trump announced the official launch of his family's new financial revolution project, World Liberty Financial (WLFI). He stated that cryptocurrency is a very strong market. His sudden cryptocurrency investment is now facing scrutiny from Democrats in the US House of Representatives.
Now, U.S. House Democrats say they will target the Trump family's WLFI cryptocurrency project, emphasizing that it has raised conflict of interest concerns because he incorporated the project into his policy message in support of cryptocurrency. If Democrats win the House again, they will have subpoena power in 2025, a power they used to target Trump's financial records during his first term.
