Bitcoin (BTC) is currently priced at $101,718, showing a 1.6% increase over the past 24 hours. Unsurprisingly, Bitcoin remains the most influential cryptocurrency in the market, boasting a market capitalization exceeding $2 trillion.
With the recent price surge, the demand for BTC has skyrocketed, leading to a reduced supply. Should this trend persist, Bitcoin might face an impending scarcity in supply, potentially driving its price even higher.
Decline in Bitcoin Spot Exchange Reserves to a 7-Year Low
Data from CryptoQuant indicates a decline in Bitcoin supply as spot exchange reserves have hit their lowest levels since mid-2018. The total Bitcoin held on spot exchanges currently sits at 1,055,716 BTC.
Over the last month, there has been a significant decrease in reserves amidst Bitcoin’s price rally above $100,000 and its reaching new all-time highs.
Notably, Coinbase, holding the highest Bitcoin reserves, saw outflows of 72,000 BTC in the past 30 days. These outflows accounted for nearly 10% of the exchange’s total Bitcoin balance.
During the same period, Binance witnessed withdrawals of 29,000 BTC, while Kraken’s outflows represented over 7% of its total Bitcoin holdings.
Moreover, data on exchange netflows from the last 30 days revealed that Bitcoin experienced negative netflows from spot exchanges on 22 days, indicating a reluctance among traders to sell.
Furthermore, the data suggests that traders are opting to hold onto Bitcoin despite its recent price surges, indicating a strong long-term bullish sentiment.
Increasing Institutional Demand
The aversion to selling has resulted in a surge in institutional demand, particularly noticeable in the inflows into spot Bitcoin exchange-traded funds (ETFs).
Recent data from SoSoValue shows that the total inflows into spot Bitcoin ETFs have exceeded $5 billion in the last three weeks, nearing 6% of Bitcoin’s total market capitalization.
Inflows into these ETFs have remained positive for the past 12 consecutive days.
If this upward trend in inflows continues, it could further tighten the supply of Bitcoin, potentially boosting its price.
Analysis of Binary CDD
Historically, long-term Bitcoin holders tend to sell when the market reaches a local peak. CryptoCrypto’s report reveals that this group began selling Bitcoin earlier this month, leading to a pause in the price rally.
The Binary Coin Days Destroyed (CDD) has maintained a level of 1 over the past five days, suggesting that long-term holders may be capitalizing on profits.
If this group of holders continues to sell, it may prevent a potential supply shortage for Bitcoin, provided that the coins being offloaded are sufficient to counterbalance the buying pressure.