Significant Withdrawal of 4.85 Million BTC from Exchanges Might Lead to Supply Shortage
Bitcoin [BTC] is currently experiencing a strong trend of accumulation, despite fluctuating between the price range of $91,000 to $105,000.
Joao Wedson, the creator of the crypto analytics company Alphractal, has revealed that almost 5 million BTC have been withdrawn from exchanges since 2020. This indicates a prevalent strategy of ‘holding’ among investors. Wedson stated,
“A total of 4.85 million BTC have departed from Exchanges starting from February 2020! The balance of Exchange Flux is witnessing a significant shift. Since 2020, the dynamics have transformed—everyone desires Bitcoin at any cost.”
Could a scarcity in supply boost the price of BTC?
Furthermore, the continuous outflows from exchanges imply that there are fewer BTC available for trading on centralized platforms. This shortage in supply, coupled with reduced selling pressure, has the potential to ignite a substantial price surge for the primary cryptocurrency.
IntoTheBlock has made a similar short-term observation, noting that exchange outflows have remained negative for the past seven trading days.
“Bitcoin exchange outflows have been consistently negative since January 21, indicating ongoing accumulation.”
During this same time frame, the cryptocurrency witnessed a decrease of over 7%, falling from $109,000 to $97,000, before bouncing back to $100,000 once again. This decline highlighted solid demand that capitalized on the discounted prices available.
Additionally, a decline in selling activity on the Binance exchange served as another indicator. CryptoQuant observed a substantial decrease in taker sell volume over the last week, signaling a temporary weakness in short-selling. A section of the analysis stated,
“With a waning influence of sellers, buyers might intervene, potentially paving the way for a fresh upward surge.”
Collectively, these insights suggest the possibility of an imminent rapid price increase in the short term. The upcoming decision on the Fed interest rates could potentially provide more clarity regarding these expectations.
It is noteworthy, though, that Arthur Hayes, the co-founder of BitMEX, presented a contrasting viewpoint. He forecasted a probable 30% decline to a range of $70,000 to $75,000 in the near future, followed by a surge to $250,000 by the year-end.