BTC Supply on Exchanges: Is a Bull Run Incoming?
Bitcoin’s bullish conviction is still evident despite its erratic price activity. Indeed, recent market movements might be beginning to support it. With an intraday recovery of 1.98% at the time of writing, bulls strategically caused a $40 million short liquidation near $104,984, which pushed Bitcoin back up to $109k.
This liquidity sweep, though, wasn’t an isolated incident. Bitcoin holdings on exchanges fell from 3.09 million to 2.8 million in June alone, indicating a nearly 9.4% decrease in a single month. As a result of this reduction, exchange-held Bitcoin now only makes up 14% of the total amount in circulation. lowest since 2017.
Investors De-Risk, BTC Supply Dries Up
In the past, aggressive supply-side imbalances have frequently been preceded by similar structural decreases in liquid supply, particularly when combined with stable or increasing demand. In other words, the cost basis per Bitcoin may experience significant upward repricing if demand, as indicated by dropping exchange balances, continues to exceed available liquidity. This is particularly likely to happen as investors rotate their capital, reduce risk, or deleverage.
That is the traditional supply squeeze‘s mechanical configuration. The present period of low volatility may be the coiling phase prior to a breakout, given 86% of Bitcoin is currently held off-exchange. However, one crucial trigger will be necessary for any possible rally to ignite, according to AMBCrypto.
Bitcoin’s Volume Ratio Flip: A Sign of Real Demand or Just a Fakeout?
Assessing the real flow of liquidity is crucial before interpreting the current indicators as blatantly bullish. Historically, increasing organic demand is indicated by a rising spot-to-derivatives volume ratio. Fakeouts may increase, though, if futures markets start to absorb that liquidity.
CryptoQuant’s Bitcoin Trading Volume Ratio (Spot vs. Derivatives) has flipped higher at the time of writing, reaching a monthly high after plunging to its lowest level in seven months at 0.05 in late May. Bitcoin notably printed its ATH in that low-ratio scenario, as the chart illustrates, highlighting the fact that the rise was mostly driven by derivatives with little spot participation. Consequently, a wave of liquidations was initiated after Bitcoin broke through the psychological $111k threshold.
For more up-to-date crypto news, you can follow Crypto Data Space.
