Bitcoin exchange deposits drops to six-year low
Bitcoin enthusiasts experienced a temporary thrill as prices leaped over $60K during the weekend, only to witness a subsequent fall, demonstrated by three successive downward trends, positioning BTC at $58K.
Debate continues among experts on whether $60K serves as a support line or a barrier. Meanwhile, a recent CryptoQuant analysis highlighted that Bitcoin exchange inflows have dwindled to a six-year minimum of 132,100, hinting at a decline in selling momentum.
The data indicates a reduction in Bitcoin exchange deposits, generally interpreted as a positive sign for the market. From an economic perspective, a diminished supply might enhance the value of each BTC unit.
For investors, the shrinkage in BTC present on exchanges could signal an anticipation of price resurgence.
The surges in BTC exchange deposits often coincide with BTC reaching new highs, reflective of profit-taking maneuvers that could precipitate sharp price retractions, hinting at possible accumulation phases.
On the flip side, a decline in deposits suggests that long-term hodlers have tightened their grip on the market, a trend discernible over the past six years since the last notable increase.
In essence, the Bitcoin community is now overwhelmingly comprised of hodlers betting on a favorable price adjustment.
The number of hodlers has impressively climbed to 38 million, an astounding 375% boost from 8 million just six years ago. Remarkably, hodlers maintaining BTC for over a year now constitute 70.77% of all addresses.
This figure surpasses the level recorded during the mid-March surge when BTC reached its all-time high.
In summary, steadfast hodlers are pivotal in averting a slide to $55K – but how likely is that?
Currently, 58.27% of LTH remain in profit, a reduction from the 74% high on March 13—a significant 16% decrease. Traditionally, such a decline in profit margins post-peak could prelude a bear market in subsequent months.
Although a majority of LTH still find themselves in a profitable stance, the narrowing margin could be indicative of an approaching slowdown or bearish phase.
Nevertheless, despite the increase in losses since March's peak when BTC flirted with $70K, the sustained support by LTH demonstrates faith in a coming price adjustment.
Should this current trend persist, LTH may refrain from offloading, as the lower rate of BTC exchange deposits indicates.
Moreover, a potential cut in the Fed interest rate might propel BTC to unseen heights, assuming the trend of dwindling BTC exchange deposits persists – but will it?
Reviewing the past 30 days, LTH sold a notable portion of their holdings for the first time on September 16th, coinciding with BTC's pullback to $58K.
As previously mentioned, for a resurgence, LTH must maintain their positions by halting additional sales.
If LTH can demonstrate that this was an irregular event, and Bitcoin exchange deposits continue to reduce, the path to a new all-time high remains open.
Alternatively, should LTH resume selling, the support level at $55K could be jeopardized, and the future path might entail greater uncertainty.
