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Bitcoin Exchange Reserves at All-Time-Low: What Will Drive BTC Price? 

Last Updated May 20, 2024 4:41 PM
Shraddha Sharma
Last Updated May 20, 2024 4:41 PM

Key Takeaways

  • Bitcoin exchange reserves are sliding and are at record lows.
  • Analysts foresee a significant price increase due to current market signals.
  • If large institutional buyers continue to acquire Bitcoin, a price rise should follow.

Bitcoin exchange reserves have hit an all-time low, indicating ‘hodling‘ and reducing the Bitcoin available for buying and selling on exchanges. 

The trend is generally a positive indicator of Bitcoin’s future price. Experts are weighing in, suggesting that we could be on the verge of a major price rally. 

Bitcoin Exchange Reserves Dip

Bitcoin exchange reserves refers to the amount of Bitcoin held on cryptocurrency exchanges. These reserves are used by traders and investors to buy and sell Bitcoin. When reserves are high, it means there is a lot of Bitcoin available for trading. In contrast, when reserves are low, there is less Bitcoin available, which can create a supply shock and increase its price.

 Since Bitcoin exchange reserves are at their lowest levels, more Bitcoin is being taken off exchanges and stored in private wallets, reducing the supply available for trading.

According  to IntoTheBlock, total exchange inflows stand at $7.73b in the past 7 days on May 20.

Total exchange outflows come at $8.03b over the same period. With more Bitcoin being withdrawn from exchanges than deposited, the net outflow trend of declining exchange reserves could continue.

Crypto analyst Jelle shared  an optimistic view on Bitcoin’s price potential, stating, “All resistance turned into support. We’re in for a ride.”

At the time of writing, Bitcoin price is inching towards $67K, showing strong support levels for future price increases.

BTC Supply Shock

Crypto analyst and commentator Lark Davis anticipates a Bitcoin supply shock. He notes , “Last week, miners produced only 3,150 Bitcoin.”

A fall in production in the month following the Bitcoin halving, could further cut BTC supply, positively impacting its price. 

The low exchange reserves, combined with high demand from institutional buyers and retail investorscould set the stage for a potential price increase. 

BTC Exchange and On-Chain Signals | Image: IntoTheBlock
BTC Signals | Source: IntoTheBlock

We know that when supply decreases and demand remains high on the back of several Bitcoin ETF funds, prices could rise. 

Meanwhile, the current price levels are also setting a positive tone. Currently, 94% of Bitcoin holders are in profit at the price with 3% at breakeven as per IntoTheBlock.

This means the majority of Bitcoin holders are experiencing gains, which could also lead to increased confidence and reduced selling pressure.

Additionally, in the past seven days, transactions worth $79.62b were greater than $100,000. Large transactions are often indicative of institutional activity. High volumes of large transactions suggest continued interest from big players, which can be a bullish signal for Bitcoin.

Bitcoin Price Could Potentially Rise

The current state of Bitcoin exchange reserves, combined with strong market fundamentals and institutional interest, points to a potentially bullish future for Bitcoin’s price. 

Analysts like Jelle and Lark Davis highlight the key factors driving this trend, including reduced supply from miners and increased demand from ETFs and institutional buyers. 

With the majority of holders in profit, Bitcoin’s market appears confident for an upward move.

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