Bitcoin Reserves on Exchanges Decline to Yearly Lows: Positive News for HODLers?
Bitcoin [BTC] has once again breached a critical resistance level, surpassing $65K after struggling to do so for more than eight months.
This recent upsurge has sparked a bullish trend, signifying increased strength in BTC.
A noteworthy development indicating this optimistic outlook is the decrease in Bitcoin exchange reserves, which have now reached their lowest point this year.
The reserves currently stand at around 2.6 million BTC. This decline implies a growing reluctance among both short-term and long-term holders to engage in selling activities, fostering expectations of imminent price hikes.
Traditionally, reduced exchange reserves are linked to a bullish sentiment in the market, signaling a lower probability of selling pressure in the short run.
Bitcoin’s Long-term Holder Accumulation on the Rise
The trend of accumulating Bitcoin among long-term holders has been steadily climbing since 2014, with the number of addresses holding BTC for over a year hitting a record high.
This robust accumulation by long-term investors forms a solid foundation for a higher price trajectory for Bitcoin.
As per data from IntoTheBlock, the number of addresses holding BTC for more than a year has increased by 0.35% in the past month.
Presently, more than 38 million addresses have retained Bitcoin for over a year, while 13 million addresses have held it for one to twelve months.
Only 2 million addresses have held BTC for less than a month, underscoring the dominance of long-term holders in the market.
This upward trend in long-term accumulation is a bullish indicator, signaling increasing investor confidence in Bitcoin’s future growth and their willingness to hold for potential profits.
Increasing Demand Signals Positive Price Momentum for BTC
Another encouraging sign for Bitcoin’s price is the rising apparent demand, which reflects the variance between production and changes in inventory.
In the Bitcoin context, production pertains to the generation of new BTC through mining, while inventory refers to the supply of Bitcoin that has remained inactive for over a year.
When the reduction in inventory surpasses new production, it indicates a growing demand for Bitcoin.
This escalating demand, coupled with a limited supply, typically propels prices upwards.
Given the recent trends, the surging demand for Bitcoin indicates an upward trajectory for prices, further bolstering the case for sustained price appreciation.
Comparison of Realized Prices between New and Seasoned Whales
The average purchase price for new whale investors currently stands at approximately $62.2K, whereas more experienced whales have an average buying price of $26.9K.
With Bitcoin now trading above these crucial price points, the likelihood of whales offloading their holdings before the market cycle peaks diminishes.
This clustering of whale acquisitions around the current levels reinforces the belief that Bitcoin’s price is primed for an upward movement.
Larger investors typically retain their positions during an uptrend, contributing to enhanced stability and confidence in the market.