Bitcoin’s price surged to $70,000 briefly this week but faltered soon after failing to sustain the momentum and took a sharp turn.
At the time of writing, the world’s largest cryptocurrency is trading at just over $67,000. Still, with exchange supply dropping to December 2021 lows, data suggest that a bullish reversal could be in the offing.
Bitcoin Scarcity on Exchanges
According to Santiment’s tweet, bitcoin’s supply on exchanges has reached its lowest since December 2021. Currently, around 942,000 BTC is available on these trading platforms.
Even as bitcoin has been unable to post a meaningful recovery, this reduction in its available supply on exchanges could potentially limit the selling pressure. Such a trend essentially indicates a bullish sentiment among investors who are holding onto their stash rather than offloading them.
Ethereum and Tether’s supply on exchanges have been increasing. For the altcoin, supply stands at around 18 million ETH. While this is not an all-time high figure, which was recorded at 29.89 million ETH in May 2020, the development is crucial because it comes at a time when investors are eagerly waiting for the spot Ether ETF to trade in the US.
Additionally, Tether’s supply on exchanges is currently hovering close to an all-time high of approximately 16.95 billion USDT, recorded in July 2022. Such a high supply of the stablecoin on the exchanges could actually be considered a bullish perspective as it means that investors sit on the sidelines prepared to make acquisitions.
Despite this, historically, when bitcoin’s supply, which can be readily traded, is limited, it suggests that holders are not looking to sell. Such a trend can reduce the downward price pressure across the broader market.
“Bitcoin’s supply on exchanges has now dropped to its lowest level since December 2021 (~942K coins). Meanwhile, Ethereum and Tether are moving back on. Historically, there is less drop-off risk for all of crypto while $BTC’s available supply to be sold is limited.”
Bitcoin Whales Are Buying
The bitcoin accumulation trend can be further validated by CryptoQuant’s analysis which indicates an inflow of over 20,000 BTC into whale wallets. It appears that this group of large investors has used the recent correction in price as an opportunity to increase their holdings.
Such actions from whales signify strong investor interest amidst short-term market fluctuations.
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