Bitcoin exchange deposits plummet to six-year low – What it means for BTC

• Bitcoin exchange deposits have hit a six-year low, marking the lowest level of BTC deposits in that time. 
• That being said, HODLERS are key in preventing a drop to the $55K support.

Bitcoin [BTC] bulls faced another setback after a brief weekend spike that pushed BTC above $60K. With three consecutive red candles, BTC has retreated to $58K. 

While analysts are split on whether $60K is support or resistance, a new CryptoQuant report shows Bitcoin exchange deposits have hit a six-year low of 132,100, signaling reduced selling pressure. 

Could this milestone help BTC avoid a drop to $55K?

Drop in BTC exchange hints at rising hodler dominance

The chart reveals fewer Bitcoin exchange deposits, typically a bullish signal. Economically, reduced supply can inflate each BTC token’s value.

While for investors, less BTC on exchanges suggests confidence in price recovery.

Source : CryptoQuant

Moreover, AMBCrypto’s analysis shows that spikes in BTC exchange deposits typically align with BTC testing high price levels, indicating profit-taking strategies and often leading to steep declines, suggesting potential accumulation. 

Conversely, fewer deposits point to increased control by long-term hodlers, as observed in the past six years since the last spike.

Put simply, the Bitcoin space is now dominated by hodlers confident in a price correction.

Source : IntoTheBlock

As expected, the hodler count has surged to 38 million, marking a staggering 375% increase from 8 million six years ago. Notably, hodlers holding BTC for over a year now represent 70.77% of total addresses. 

Surprisingly, this percentage exceeds the count observed during the mid-March rally, when BTC hit its ATH.

In short, long-term holders are key to preventing a drop to $55K – but what are the odds?

The odds are intriguing

Currently, 58.27% of LTH are in profit, down from a peak of 74% on March 13—a 16% decline. Historically, a drop in the profit margin after hitting highs can signal a potential bear market months later. 

Source : X

In short, while most LTH remain profitable, the weakening margin could suggest a slowdown or bearish trend ahead. 

However, despite increasing losses since the March peak when BTC tested $70K, LTHs continued support indicates belief in a potential price correction.

If this trend continues, LTH might hold off on selling, as evidenced by reduced BTC exchange deposits. 

Additionally, a potential Fed interest rate cut could drive BTC to a new ATH, assuming BTC deposits on exchanges continue their downward trend – Will they?

Time will tell

On the 30-day lookback period, LTHs sold a significant portion of their holdings for the first time on September 16th, coinciding with BTC’s retracement to $58K.

Source : Glassnode

As mentioned earlier, for a recovery, LTHs need to support their positions by avoiding further sales. However, this downtick was a rare occurrence, still aligning with AMBCrypto’s earlier projections.

Read Bitcoin’s [BTC] Price Prediction 2024–2025

If LTHs can prove this event to be an anomaly, and Bitcoin exchange deposits remain low, the door to a new ATH could still be wide open.

Conversely, if LTHs continue to sell, the $55K support may be at risk, and the path forward could become much more uncertain.