Declining Bitcoin Supply on Exchanges Signals Potential Bull Market Amid Growing Demand

The diminishing Bitcoin supply on cryptocurrency exchanges is raising speculation among analysts that a bull market may be on the horizon, assuming demand continues to rise. The amount of Bitcoin held on exchanges has hit a new low, which could trigger a price rebound and help Bitcoin surpass the $60,000 mark.

CryptoQuant contributor Gaah emphasized in an August 29 analysis that the dwindling Bitcoin reserves on exchanges might suggest reduced selling pressure. “With Bitcoin reserves reaching their lowest point this year, this trend could support a bullish market, provided demand sustains its growth,” Gaah noted.

Data from CryptoQuant reveals that Bitcoin reserves on exchanges have dropped by 12.9% since the beginning of the year, leaving just 2.62 million BTC across all major exchanges.

Gaah further explained that the movement of Bitcoin to cold wallets often reflects a long-term commitment from investors, signaling their belief in Bitcoin’s future price growth. This decrease in exchange supply aligns with analysts’ predictions that Bitcoin could experience a price rally in the fourth quarter of 2024.

Gaah also pointed out that the rising number of long-term holders is strengthening the market by reducing the chances of panic-induced sell-offs. “With fewer Bitcoin available for quick sale on exchanges, market liquidity decreases,” he added.

On August 27, pseudonymous crypto trader MartyParty highlighted the “ultra-low” Bitcoin reserves in a post on X, suggesting that “something is happening.” Another crypto commentator, Bitcoin for Freedom, told their 74,800 X followers that the recent surge of 56,000 Bitcoin moving off exchanges since August 22 could indicate an impending supply shock, stating, “This is not sustainable.”

As of this publication, Bitcoin is trading at $58,970 after briefly testing the critical $60,000 level earlier in the day, according to CoinMarketCap. It has also been revealed that long-term holders have invested over $10 billion in Bitcoin and are refraining from selling as the price remains below its peak of $69,000.