Bitcoin – 4.85M BTC withdrawn from exchanges, is a supply squeeze likely?
Long and short-term accumulation trends for BTC could trigger a renewed uptrend, BUT...
- 4.85M BTC has left exchanges since 2020, signaling strong accumulation
- Will the sharp drop in CEX selling pressure trigger a new uptrend?
Bitcoin [BTC] is under a strong accumulation trend, despite the ongoing whipsawing between $91k-$105k.
In fact, according to Joao Wedson, founder of crypto analytics firm Alphractal, nearly 5M BTC has left exchanges since 2020. This highlights a strong ‘holding’ strategy among investors. He said,
“4.85M BTC have left Exchanges since February 2020! The Exchange Flux Balance shows a massive shift. Since 2020, the game has changed—everyone wants Bitcoin at all costs.”
Will supply squeeze rally BTC’s price?
By extension, the record outflows from exchanges seemed to suggest that there are fewer BTC for sale on centralized exchanges. This supply squeeze and low selling pressure could trigger a wild price rally for the king coin.
IntoTheBlock made a similar short-term observation, noting that exchange flows have been negative for the past seven trading days.
“Bitcoin exchange flows have been negative since the 21st of Jan, hinting at ongoing accumulation.”
Over the same period, the cryptocurrency dropped by over 7%, declining from $109k to $97k, before reclaiming $100k at press time again. This revealed that the dip was marked by strong bids that took advantage of the discounted prices.
That’s not all though. A similar drop in selling pressure on the Binance exchange was another telltale sign. CryptoQuant noted that the taker sell volume dropped significantly over the past week, indicating short-term weakness amongst short-sellers. Part of the analysis read,
“As the influence of sellers diminishes, buyers may step in, potentially leading to a new upward wave.”
Taken together, it implied that an explosive rally might be on the cards in the short term. Perhaps, the upcoming Fed rate decision could offer more clarity on the aforementioned expectations.
Worth pointing out, however, that the co-founder of BitMEX, Arthur Hayes, had a contrarian take. He projected a likely 30% drop to $70k-$75k in the near term, before a rally to $250k by the end of the year.
