Key Points
- Bitcoin exchange reserves have hit their lowest levels of the year, indicating bullish market sentiment.
- The number of addresses holding Bitcoin for over a year has reached an all-time high, supporting a higher price trajectory.
Bitcoin [BTC] has successfully broken through a key resistance level, rising above $65K, a level it had struggled to break through for over eight months. This recent surge has triggered bullish momentum, indicating that BTC is gaining strength.
Decline in Exchange Reserves
A significant sign of this positive outlook is the drop in Bitcoin exchange reserves, which have hit their lowest levels of the year. The reserves stood at approximately 2.6 million BTC. This decline suggests that both short-term and long-term holders are increasingly unwilling to sell, fueling expectations of further price gains.
Historically, lower exchange reserves are associated with bullish market sentiment as they indicate a reduced likelihood of selling pressure in the near term. Bitcoin’s accumulation trend among long-term holders has been steadily rising since 2014, and the number of addresses holding BTC for over a year is now at an all-time high.
Accumulation and Demand
This strong accumulation by long-term investors supports a higher price trajectory for Bitcoin. According to data from IntoTheBlock, the number of addresses holding BTC for more than a year has increased by 0.35% over the past month. Currently, over 38 million addresses have retained Bitcoin for more than a year, while 13 million addresses have been held for one to twelve months.
Another positive indicator for Bitcoin’s price is the apparent demand, which measures the difference between production and changes in inventory. In the context of Bitcoin, production refers to the issuance of new BTC through mining, while inventory refers to the supply of Bitcoin that has been inactive for over a year. When the inventory reduction outpaces new production, it signals increasing demand for Bitcoin.
The average purchase price of new whale investors is currently around $62.2K, while more experienced whales have an average purchase price of $26.9K. With Bitcoin now trading above these key price levels, it becomes less likely that whales will sell their holdings until the market cycle peaks.
This consolidation of whale purchases around the current levels reinforces the belief that Bitcoin’s price is poised to move higher. Large investors typically hold onto their positions during an uptrend, adding further stability and confidence to the market.