A drop in BTC supply on exchanges is viewed as a bullish signal, indicating a growing inclination among investors to retain their assets.
Bitcoin (BTC) supply on centralized crypto exchanges has reached a six-year low, signaling a decrease in selling intent.
The Bitfinex Alpha report reveals that exchange-held BTC has experienced its 45th consecutive month of declining supply, coinciding with BTC encountering a notable resistance level at $45,000.
Bitcoin supply on exchanges continues its decline.
Typically, long-term investors or significant holders transfer their assets to crypto exchanges for selling, later withdrawing their balances to store in cold wallets for prolonged periods.
The decrease in BTC supply on exchanges is seen as a bullish indicator, reflecting a heightened inclination among investors to retain their assets and a diminished intention to sell. This reduction also suggests a potential move toward decentralized and self-custody solutions.
The continuous decrease in exchange-held BTC since 2017 has had a notable impact on the asset’s volatility, liquidity, and broader market dynamics. This trend extends to BTC deposit transactions on exchanges, which have plummeted to multi-year lows. Current deposits on exchanges are now at a level not observed since July 2020, indicating a decrease in selling pressure.
BTC encounters resistance at $45K as deposit transactions decrease and the asset’s supply on exchanges dwindles. Concurrently, the network’s Spent Output Profit Ratio indicates a prolonged period of profit for holders, remaining above one for 44 consecutive days.
Bitcoin’s recent surge propelled the asset beyond $44,000, marking a 170% increase since the beginning of the year. Nevertheless, the leading cryptocurrency encountered resistance at $45,000, leading to a decline. According to CoinMarketCap data, BTC was trading at approximately $41,700 at the time of writing.
Bitfinex highlighted that the $45,000 resistance level holds significant importance for medium-term investors who acquired BTC between two to three years ago. Surpassing $45,000 in December would signify the largest percentage recovery for the asset within a year.
Sustained stability for BTC above the current support at $40,000 has the potential to boost overall market sentiment. On the flip side, difficulties in surpassing this level might induce selling pressures. Bitfinex analysts emphasized the importance of monitoring the movement of coins from this age group to exchanges, as it could indicate intentions to sell or fortify positions.
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