The price of Bitcoin has already risen 10% in the last seven days, surpassing the US$67,000 mark again in the last few hours. The Coinmarketcap Fear and Greed Index has Now it’s changed to greed in light of recent buying momentum and shows no signs of slowing down.
THE buying pressure on Bitcoin has been so big over the last few days, leading to a huge decline in the number of BTC available on cryptocurrency exchanges. According to network data, this caused Bitcoin’s foreign exchange reserve to fall to its lowest point in five years.
BTC exchange reserve drops to 5-year low
In recent days, demand for Bitcoin has outstripped its supply, leading to a sharp decline in foreign exchange reserves. According to CryptoQuant data republished on social media platform X by crypto analyst Ali Martinez, the number of BTC held on exchanges is now at a five-year low of 2.6 million BTC.
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Martinez graph reveals an intriguing trend in Bitcoin’s foreign exchange reserves that has developed over the year. As of early 2024, reserves are approximately 3.05 million BTC. However, this number has decreased enormously since then.
The dwindling supply of Bitcoin on exchanges could be attributed to several key factors. First, there is the growing interest from institutional participants, especially following the approval and growing momentum of Spot Bitcoin ETFs. These ETFs have triggered significant purchasing activitywith US-based Spot Bitcoin ETFs eventually becoming the second largest holders of BTC behind Satoshi Nakamoto.
Many long-term holders also contributed to the buying pressure as many continued to buy en masse. Even periods of price corrections and sales by short-term holders have been highlighted by the movement of more BTC. in long-term stable hands that are less likely to sell.
As a result, the total amount of Bitcoin held on cryptocurrency exchanges has fallen by around 450,000 BTC since January, bringing the current reserve to just 2.6 million BTC. This is the lowest level seen since January 2019, and such a sharp decline typically signals a bullish outlook for Bitcoin. “We all know what that means,” Martinez he said.
What does this mean for the price of Bitcoin?
The current state of Bitcoin’s foreign exchange reserves suggests that market participants are increasingly holding onto their BTC in anticipation of future gains, as many people continue to speculate on the direction Bitcoin’s price could take in the coming months.
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When fewer coins are available on exchanges, it often indicates reduced selling pressure, which drives the price higher as demand continues to increase.
Uptober is now fully in playand Bitcoin has already risen 6.3% in the month. At the time of writing, Bitcoin is trading at $67,200. This remarkable price puts Bitcoin on track to surpass its all-time high of $73,737 before the end of October.
Featured image created with Dall.E, chart from Tradingview.com