Bitcoin on the rise: Declining supply on exchanges and chance for All-Time high

Bitcoin on the rise: Declining supply on exchanges and chance for All-Time high

The supply of bitcoin on exchanges has reached its lowest level in eight years, raising the question: Will BTC set a new all-time high? The current supply stands at just 7.53%, the lowest figure since 2018. This trend suggests that more and more investors are opting to move their bitcoins into self-storage, reducing the amount available for immediate sale on exchanges.

A decrease in supply on exchanges usually signals less short-term selling pressure and growing holder confidence, which is often interpreted as a bullish signal for the future price of bitcoin. Investors thus have reason to be optimistic.

One of the key factors influencing the bitcoin price is institutional demand. Since March 14, bitcoin exchange-traded funds have seen a steady inflow of investment, which has contributed to a more than 10% increase in the BTC price. In contrast, between February 10 and March 13, inflows into ETFs were negative, leading to a 17% decline in the bitcoin price. This pattern shows a strong link between institutional purchases and price movements, with large investors having more influence on the market than small speculators.

Economists warn of an impending recession and wonder whether there will be another crash or, on the contrary, a rise in bitcoin and altcoins. Changes in the bitcoin market suggest that its behavior is evolving. Historically, a 50% decline was considered a bear market, but as bitcoin has matured, extreme declines caused by panic selling have become less frequent. Today, it only takes a 30% drop for investors to start feeling worried.

According to research published on March 25 on the OKX website, it appears that Bitcoin could be going through a brief "mini" bear market, rather than the long-term declines of past cycles. The first indicator of this change was the ratio of short-term holders' market value to realized value, which compares the current price of bitcoin to the average price at which short-term investors bought their coins. This metric showed bearish sentiment even before the significant price drop on February 25.

Now that it has fallen below its 365-day moving average, it is a critical level usually signaling more selling pressure. However, analysts expect this metric to improve and lead to a relief rally, especially with the declining supply of bitcoin on exchanges.

Overall, then, the bitcoin market situation offers interesting prospects. With growing investor confidence and declining supply on the exchanges, BTC seems to have the potential for strong growth and possibly reaching a new all-time high.

*This is not an investment recommendation.

Coingarage Team