Bitcoin Exchange Reserves Decline

The quantity of Bitcoin available for trading has been steadily declining, as evidenced by the recent record lows reached by exchange reserves on all major exchanges. When combined with a notable price increase, this pattern points to a developing shortage that may aggravate price fluctuations.

Holding Sentiment

Reduced exchange reserves generally indicate longer-term holding sentiment, which is bullish as more investors withdraw their holdings from exchanges. The graph of exchange reserves shows a consistent decline since the beginning of 2022, suggesting that Bitcoin is being kept in private wallets more often than it is available for trading.

Potential Price Movements

A supply squeeze brought on by this ongoing decline in liquidity, especially during times of high demand, may cause prices to rise. Bitcoin's last all-time high was $73,679, and since its reserves are still running low, there may be a chance for it to reach that level again. Currently, the Bitcoin price chart shows levels of support and resistance. The recent surge above $72,000 suggests that, should the current momentum continue, the price may continue to rise toward its all-time high.

Key Thresholds

The psychological threshold of $75,000 is the main obstacle to watch. If Bitcoin breaks through this barrier, the next targets could easily approach $80,000 or higher. In the event of a pullback, the $66,000 level serves as a strong cushion on the support side. Bulls would need to defend this level to maintain upward momentum.

Buying Pressure

Any increased buying pressure from institutions or individual investors could raise Bitcoin's price in a market with limited supply, especially since reserves are reaching all-time lows. A supply squeeze is likely to occur due to Bitcoin's declining exchange reserves and strong demand. This may force the cryptocurrency to test past highs and establish new ones. Investors will keep a close eye on how these factors affect Bitcoin's trajectory as it approaches its historical highs.

This article was originally published on U.Today