An analyst has explained how Bitcoin is likely to continue its latest bullish swing, at least in the short term.
Bitcoin Spot Exchange Supply Has Been Decreasing Recently
In a new publish In X, analyst Willy Woo discussed the short-term and medium-term trajectories that BTC could follow. For the former, the analyst says the uptrend would continue, “probably with 1 week left in play.”
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In the medium term, things look more complicated, as Woo pointed out the trend forming in Bitcoin. stock on centralized exchange platforms.
Below is the chart shared by the analyst that shows the trajectory of the value of this metric in recent years.
As visible in the chart above, the exchange supply of spot Bitcoin (the blue line) has decreased recently, suggesting that investors have been withdrawing their coins to self-custodial wallets.
Typically, one of the main reasons investors hold their coins on spot platforms is for selling purposes, so the BTC spot supply can be seen as an estimate of the available selling supply for the cryptocurrency. As such, investors withdrawing their coins from this supply can naturally be a bullish sign for Bitcoin.
In the current era, however, spot BTC is not the only factor affecting the asset’s price, as another form of exchange supply has gained popularity in recent years: BTC Paper.
Paper BTC refers to cryptocurrency-related derivatives contracts that do not require users to own any tokens. With Paper BTC gaining more and more dominance, its influence on the market has become quite apparent.
In the graph, the purple line corresponds to the total BTC exchange stock; that is, it shows the sum of BTC Spot and Paper present on the various platforms.
It appears that while spot BTC itself has declined recently, the same has not been true for the combined supply of spot and paper BTC, which has continued to move sideways. This would imply that paper BTC is being printed at roughly the same rate as spot BTC, which investors are withdrawing.
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A surge in Paper BTC is usually not a good sign for Bitcoin, so it could hinder BTC’s upward momentum. Woo notes, however, that things could change quickly if a little market pressure occurs.
One “squeeze”refers to an event where a large amount of liquidations occur at once, so a short squeeze in particular would naturally be the occurrence of a large amount of short liquidations.
“Current demand and supply are neutral and bearish, but there are signs of a shift to a bullish structure if we get some liquidations,” says the analyst.
BTC Price
Bitcoin recovered past the $61,000 mark yesterday but appears to have slipped today as its price is now hovering around $59,600.
Featured image by Dall-E, woocharts.com, chart by TradingView.com
