Bitcoin Supply Plunge on Exchanges Sparks Bull as $60K Retest Looms

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Bitcoin reserves on cryptocurrency exchanges have plummeted to a new supply low, a development that could signal a bullish move for the digital asset as it eyes a return to the $60,000 mark. According to data from CryptoQuant, the amount of BTC held on major exchanges has dropped by roughly 12.9% since the start of the year, leaving just 2.62 million Bitcoin across all platforms as of August 29.

Bullish Indicator

This significant decrease in exchange reserves is often viewed as a bullish indicator, suggesting that investors are increasingly transferring their Bitcoin to cold storage, a move typically associated with long-term holding strategies. As fewer Bitcoin are available for immediate sale on exchanges, the selling pressure decreases, potentially setting the stage for a price surge if demand continues to grow.

CryptoQuant contributor Gaah stated this trend in a recent analyst note, stating that the reduced availability of Bitcoin on exchanges could favor a bull market. “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 noted.

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Price Rally in Q4?

The shift in Bitcoin reserves aligns with recent predictions from analysts that the digital asset could see a price rally in the fourth quarter of 2024. The growing number of long-term holders, who are increasingly moving their Bitcoin off exchanges, suggests a market that is becoming more resilient and less susceptible to panic selling. “When there is less BTC available on exchanges, there is less liquidity available for immediate sale,” Gaah explained, emphasizing the potential for a supply shock.

Pseudonymous crypto trader MartyParty also weighed in on the situation, noting the “ultra-low” Bitcoin reserves in a recent X post. “Something is happening,” he stated, hinting at an impending supply shock that could drive prices higher. Similarly, Bitcoin for Freedom, another crypto commentator, pointed out that a total of 56,000 BTC had been withdrawn from exchanges in just the last week, a clear sign that investors are pulling back from selling.

BTC is currently trading around $58,500, having briefly retested the critical $60,000 level earlier in the day, according to CoinMarketCap data. The growing confidence among long-term holders, who have collectively spent over $10 billion acquiring Bitcoin and have been reluctant to sell since its peak at $69,000, further reinforces the bullish outlook for the asset.

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