Bitcoin Exchange Reserves Hit New Annual Low During $60K Price Retest

August 30, 2024 02:19 PM AEST | By Team Kalkine Media

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Bitcoin Exchange Reserves Hit New Annual Low During $60K Price Retest — Image source: shutterstock

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Bitcoin supply on cryptocurrency exchanges may signal a forthcoming bull market, provided that demand continues to rise. Data indicates that Bitcoin reserves on exchanges have recently reached their lowest level of the year, which could serve as a critical catalyst for Bitcoin to surpass and maintain a price above $60,000.

According to a note by CryptoQuant contributor Gaah, the reduction in {Bitcoin} (BTC) held on exchanges could imply diminished selling pressure, creating favorable conditions for a bull market, provided that demand remains robust. Since the beginning of the year, Bitcoin reserves on exchanges have declined by approximately 12.9%, with a total of 2.62 million Bitcoin now held across major platforms.

Gaah emphasized that the transfer of Bitcoin to cold storage generally reflects a long-term commitment by holders, suggesting optimism about future price movements. This trend of reduced exchange reserves aligns with recent forecasts indicating a probable rally in Bitcoin’s price during the fourth quarter of 2024.

Additionally, Gaah noted that an increase in long-term holders contributes to a more stable market, which is less susceptible to large-scale panic sales. The reduction in Bitcoin supply on exchanges has been marked by significant movements, with 56,000 Bitcoin moved off exchanges over the past week alone, reflecting a growing trend among long-term holders.

At the time of reporting, Bitcoin was trading near $58,970, having recently tested the $60,000 level. The overall market sentiment is bolstered by the fact that long-term holders have significantly increased their acquisition of Bitcoin, particularly as its price has corrected from previous highs.

Overall, the declining Bitcoin supply on exchanges combined with a steady rise in long-term holding behavior suggests a for a supply-driven price rally, contingent on continued demand growth.

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