BTC price peaked at $52,858 on Feb. 15, bringing its monthly gains to 24.3%, an unusual trend in Bitcoin exchange flows suggests more dramatic action could follow.
Bitcoin price has entered a new 2024 peak in the last four days, dating back to Feb. 12.
Investors shifted $1.6 billion in Bitcoin into long-term storage
Thanks to heightened buying pressure from investors piling funds into the newly launched spot ETFs, Bitcoin has added over $200 billion to its market capitalization within the first half of February.
However, looking beyond the flashy headlines and record-breaking fund inflows, critical on-chain data trends suggest the rally may be far from over.
CryptoQuant’s exchange reserves metric tracks real-time changes in the number of BTC coins currently deposited on crypto exchanges and trading platforms.
As depicted in the chart, Bitcoin exchange reserves stood at 2.1 million BTC on Jan. 25. But that figure has now declined by 31,255 BTC to hit just over 2 million BTC when writing on Feb. 15.
Valued at the current price of $52,000, this implies that $1.6 billion worth of BTC has disappeared from exchanges as investors increasingly opt for long-term storage.
Essentially, such a massive decline in exchange reserves means a lot less supply of BTC is now available to be traded on exchanges. Albeit temporary, this often positively impacts short-term price action for several reasons.
Firstly, it signals that most investors are angling for future gains rather than loading up their exchange wallets in hopes of exploring short-term selling opportunities at current peak prices.
More importantly, the relative scarcity created by the dwindling market supply leads to an accelerated price upswing with every new wave of demand. With Bitcoin ETF sponsors on a buying spree, this bullish catalyst will likely drive BTC price toward the $60,000 milestone in the days ahead.
Forecast: Can Bitcoin price reach $60,000?
In summary, the induced market scarcity from the decline of $1.6 billion exchange reserves puts the BTC price in a prime position for another leg-up toward $60,000. However, in the short term, the bullish traders face a major roadblock in the $55,500 area.
IntoTheBlock’s in/out of the money (GIOM) data groups existing BTC holders according to their historical buy-in prices. It depicts that 462,640 addresses have acquired 228,000 BTC at the minimum price of $55,595.
This cluster of holders could mount a roadblock if they book some profits as Bitcoin approaches its break-even price.
However, if the bulls can stage a decisive breakout above that $55,500 resistance, a $60,000 retest could be on the cards as predicted.
On the downside, the bears could invalidate this bullish prediction if Bitcoin’s price dips below $45,000. However, as seen above, the 898,470 addresses that acquired 509,330 BTC at an average price of $46,400 could mount a support buy-wall.
In a bearish reversal, frantic covering purchases from those investors could inadvertently trigger a rebound.
