The supply of bitcoin (BTC) on centralized crypto exchanges has plummeted to its lowest level in six years, suggesting a reduced desire to sell.
The latest edition of the Bitfinex Alpha report reveals that exchange-held BTC has now seen 45 consecutive months of declining supply, coinciding with BTC reaching a significant resistance level at $45,000.
Continued Decline in Bitcoin Supply on Exchanges
Typically, long-term investors move their assets to crypto exchanges to sell, then withdraw their balances from these platforms to store them in cold wallets for extended periods.
The decrease in BTC supply on exchanges is viewed as a bullish sign, indicating a growing commitment from investors to hold their assets rather than sell them, as well as a shift toward decentralized and self-custody solutions.
Since 2017, the reduction in exchange-held BTC has significantly impacted the asset’s volatility, liquidity, and overall market dynamics. Additionally, BTC deposit transactions to exchanges have plunged to multi-year lows, recently reaching the level last seen in July 2020, suggesting reduced selling pressure.
As BTC deposit transactions and the asset’s supply on exchanges have decreased, the network’s Spent Output Profit Ratio has remained above one for 44 consecutive days, indicating that a large portion of holders are currently in profit.
While Bitcoin recently surged above $44,000, representing a 170% increase from the start of the year, it faced resistance at $45,000 and has since fallen to around $41,700, as per CoinMarketCap data.
Bitfinex analysts emphasized the importance of the $45,000 resistance level for medium-term investors and suggested that BTC staying above support levels of $40,000 could enhance overall market positivity.
For more information, read the full article here.
