Bitcoin has been rising sharply since Trump's victory last month, reaching a high of $99,588 on November 22, but failed to challenge $100,000 and fell back to $90,791 on November 26. It has been fluctuating between $95,000 and $98,000 in recent days, currently trading at $95,383, with intense bull-bear battles.
Does the low BTC exchange balance suggest a bullish outlook?
Although BTC has failed to challenge $100,000 recently, André Dragosch, Head of European Research at Bitwise, pointed out today that BTC's illiquid supply has reached a new all-time high, while exchange balances have hit a new multi-year low, indicating that the scarcity of BTC in the market has increased, which may have a bullish impact on BTC:
Nearly 75% of the supply is 'illiquid', and the remaining supply on exchanges accounts for less than 14%, meaning that the scarcity of BTC is continuing to intensify.
GM from Europe☕️
Bit's illiquid supply has reached a new all-time high while exchange balances hit a new multi-year low...
Almost 75% of supply is deemed 'illiquid' while less than 14% of supply remains on exchanges...
Bit's supply scarcity continues to intensify. pic.twitter.com/beSASSuyK2
— André Dragosch, PhD | Bit & Macro ⚡ (@Andre_Dragosch) December 2, 2024
Coinglass data shows that as of December 1, the total BTC balance on exchanges has dropped to only 2.27 million, a new multi-year low.
As BTC liquidity on exchanges continues to decline, Microstrategy has significantly increased its BTC holdings by 100,000 BTC in the past 10 days, raising its BTC position from 280,000 to 387,600 BTC, further reducing the circulating supply of BTC in the market.
As more and more companies start to emulate Microstrategy's model by raising funds through the issuance of convertible bonds, new shares, or bank loans to purchase BTC and hold it as a long-term asset on their balance sheets, and as BTC spot ETFs continue to see net inflows, institutional capital is pouring in, further exacerbating the supply tightness in the market.
This raises a thought-provoking question: with exchange balances continuing to decline, will the market be able to continue to meet the large-scale demand from these companies and institutional investors? If exchange BTC balances continue to drop to even lower levels, or even experience liquidity exhaustion, could this lead to more violent fluctuations in BTC prices, or even further push them to new historical highs?
Faced with market uncertainties, investors may need to be psychologically prepared for potential high volatility, and closely monitor exchange balances, BTC spot ETF net inflows, and institutional buying dynamics, as these indicators may become key signals for predicting BTC price trends.
CryptoQuant is optimistic about more upside potential for Bit
Regarding the recent volatility in Bit, CryptoQuant recently released a report stating that the recent correction is just a temporary setback in Bit's push to challenge the $100,000 mark, and that Bit will ultimately break through $100,000, and that CryptoQuant believes Bit's peak valuation in this bull market will reach at least $147,000.
