On-chain data reveals growing sentiment to hold Bitcoin among investors. Bitcoin has been on a roll since the beginning of the month, pushing its price to new annual highs. At the same time, exchange data from CryptoQuant reveals that crypto might preparing for a sustained bull run. According to the on-chain analytics platform, the exchange supply of Bitcoin, the amount that can be bought on exchanges, has decreased to the lowest level since 2017
Exchange Supply Drops To Lowest Level In Six Years
The Bitcoin market is flashing a bull signal related to the anticipation of spot Bitcoin ETF applications. CryptoQuant’s exchange reserve chart shows that the supply of Bitcoin has been steadily decreasing from centralized exchanges since 2020 when it reached a high of more than 3.2 million BTC. The outflow was exacerbated in the last quarter of 2022, when the collapse of the crypto exchange FTX led to panic and investors began to opt for self-custody in cold wallets. During this period, exchange reserves decreased from 2.512 million BTC to 2.158 million BTC in one month.
Lowest Supply of #Bitcoin in Six Years
“We are now in the 45th month of declining supply. For the first time, supply has returned to 2017 levels. “
— CryptoQuant.com (@cryptoquant_com) December 8, 2023
The exchange reserve began to gradually increase in the first months of 2023, rising back to 2.240 million in May. However, things started to change in June, he said BlackRock filings and other investment companies for Spot Bitcoin ETF trading in the US led to the start of a bullish sentiment.
Bitcoin slightly below the $44K level today. Chart: TradingView.com
Reserves on centralized exchanges have continued to decline since then. At the time of writing, the exchange reserve has now crossed below 2 million BTC, a level not reached since December 2017. This six-year low metric is particularly interesting, as the total Bitcoin circulation supply has increased since 2017. The total Bitcoin supply now stands at 19,564,812 BTC, a 16% increase from the December 2017 supply of 16.78 million BTC.
Outlook For Bitcoin Price: Bull Signal?
Although there are technically more bitcoins now available to go around, the increasing adoption made it more difficult for entrepreneurs to acquire the asset. Dropping exchange supply is a strong signal for crypto assets and periods of low exchange supply have historically been linked to the start of significant Bitcoin runs. The last time Bitcoin had a drastic drop in exchange reserve was in 2020, and the crypto would later go on to reach all-time highs the year after.
Bitcoin is currently leading new entries to the crypto industry, as Coinmarketcap’s Fear and Greed Index now points out in the extreme greed of 82. The industry’s leading asset recently exceeded $44,000 for second time this week and now up 14% in 7 day timeframe. Bitcoin is poised for serious gains in 2024, and many analysts are predicted a price target above $100,000.
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