Bitcoin Supply on Exchanges Hits New Low, Paving the Way for Potential Price Surge Above $60,000

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The amount of Bitcoin stored on cryptocurrency exchanges has plummeted to a new annual low, a development that could ignite the next major price rally, pushing the leading crypto back above the critical $60,000 mark.

CryptoQuant contributor Gaah highlighted this trend in an Aug. 29 analyst note, pointing out that the dwindling BTC reserves on exchanges could signal reduced selling pressure. “With Bitcoin reserves on exchanges hitting new lows for the year, this could indicate reduced selling pressure, potentially favoring a bull market if demand also continues to grow,” Gaah explained.

Bitcoin Holdings Shift to Cold Wallets

According to CryptoQuant data, the year-to-date high for Bitcoin supply on exchanges was just over 3.05 million BTC. However, since Jan. 1, the amount of Bitcoin held on these platforms has decreased by approximately 12.9%, leaving only 2.62 million Bitcoin across all major exchanges.

This significant decrease in exchange reserves suggests that more BTC is being moved to cold wallets, a trend typically associated with long-term holding. Gaah emphasized that this shift indicates growing investor confidence in Bitcoin’s future price potential. “Bitcoin moving to cold wallets generally indicates that investors are committed to holding the asset long-term and are optimistic about its price potential,” Gaah noted.

The reduction in available BTC supply on exchanges comes amidst predictions from various analysts that the crypto’s price could see a substantial rally in the fourth quarter of 2024. Gaah also mentioned that the growing number of long-term holders is likely to lead to a more stable market, less susceptible to panic-driven sell-offs. “When there is less Bitcoin available on exchanges, there is less liquidity available for immediate sale,” he added.

Also read: CEX vs DEX: Understanding the Key Differences in Cryptocurrency Trading Platforms

Pseudonymous crypto trader MartyParty echoed this sentiment in an Aug. 27 X (formerly Twitter) post, remarking on the “ultra low” Bitcoin reserves. “Something is happening,” MartyParty commented, suggesting that the market might be on the brink of a significant shift.

Continuing my coverage of ultra low Bitcoin reserves. @coinbase under 1m remaining. @binance down 44100 Bitcoin and had to move 30000 from their personal cold storage to support their exchange liquidity.

Something is happening. Triggered 4th August. pic.twitter.com/gp30JIITGF
— MartyParty (@martypartymusic) August 27, 2024

Potential for a Supply Shock

Further fueling speculation of an impending supply shock, another crypto commentator, Bitcoin for Freedom, noted that 56,000 BTC had been moved off exchanges in the last seven days. “The supply shock will come soon because this is not sustainable,” the commentator warned their 74,800 followers on X.

14,600 Bitcoin taken off Coinbase today and 56,000 taken off exchanges the last week. That’s more than 4 months of mined supply. The supply shock will come soon because this is not sustainable.
— Bitcoin for Freedom (@BTC_for_Freedom) August 29, 2024

Recent data also revealed that these long-term holders have collectively spent over $10 billion to acquire BTC and have shown a tendency to hold rather than sell, even as the price has declined from its all-time high of $69,000. This continued accumulation and withdrawal of the leading crypto from exchanges could set the stage for a significant price surge in the coming months, especially if demand picks up in the final quarter of the year.

As BTC’s liquidity on exchanges continues to shrink, the market is closely watching for the next potential breakout, which could propel the cryptocurrency to new heights, solidifying its status as a leading digital asset.

Author

Steven Walgenbach

Steven's passion for cryptocurrency and blockchain technology began in 2014, inspiring him to immerse himself in the field. He notably secured a top 5 world ranking in robotics. While he initially pursued a computer science degree at the University of Texas at Arlington, he chose to pause his studies after two semesters to take a more hands-on approach in advancing cryptocurrency technology. During this period, he actively worked on multiple patents related to cryptocurrency and blockchain. Additionally, Steven has explored various areas of the financial sector, including banking and financial markets, developing prototypes such as fully autonomous trading bots and intuitive interfaces that streamline blockchain integration, among other innovations.

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