- Bitcoin reserves on exchanges hit a new low since the beginning of 2021, implying that supply shock is brewing.
- Large wallet addresses holding 100 to 10,000 BTC have accumulated $2.9 billion worth of the asset over the past three days.
- For over a year, bitcoin spending by wallets holding the asset has dropped to a multi-year low.
Bitcoin holders are unshaken by the spike in volatility, though retail sentiment has flipped to permanently bearish. Analysts expect the altcoin to revisit the $50,000 level shortly.
Bitcoin rally is imminent as accumulation by holders continues
When Bitcoin hit its historical all-time high of $64,804 nearly five months ago, reserves on exchanges had hit a low. Following the recent drop to $44,000 on September 13, Bitcoin reserves on exchanges have hit a new low since the beginning of 2021.
Historically, a supply shock is followed by an adjustment in the asset’s price.
Dropping exchange reserves are likely to trigger a supply shock, and analysts expect Bitcoin’s price to hit $50,000 in the short term.
Pseudonymous cryptocurrency analyst and trader @TraderCoz expects BTC to hit $50,000 if the price holds above $47,300 despite a pullback.
$BTC
— TraderKoz (@TraderKoz) September 15, 2021
Broke out of our range that we were stuck in for a week or so.
I want to see 47.3k hold if we pull back at all. Ultimately though, I'm looking for a push up to 50k next.
Bulla. pic.twitter.com/LSpyT76VeQ
Since the level of available Bitcoin supply across exchanges is close to when the asset rallied to $65,000, prevailing supply shock may push the price closer to breakout.
Interestingly, another critical factor in the Bitcoin price rally is accumulation by whales or large wallet investors (holding between 100 to 10,000 BTC). Ahead of the September 7 flash crash, millionaire addresses dropped their BTC holdings by nearly $3.6 billion.
BTC price plunged by 15% after whale addresses sold over 70,000 coins. Large wallet investors continued accumulating through the dip and have added 60,000 BTC in the past three days. This implies that Bitcoin’s second leg up is closer than expected.
Bitcoin accumulation by large wallet investors.
Wallets holding BTC for over a year (old hands) have nearly stopped spending their Bitcoin. No redistribution of BTC from old hands signals firm conviction of holders in a bull run.
At the time of writing, Bitcoin price is back above $48,000, and Net Realized Profit/Loss, an indicator that shows whether investors are selling at a profit or loss, has turned positive again. Bitcoin holders are now selling the asset at a net profit, and buyers across exchanges are absorbing the sold coins.
Yan Allemann and Jan Happel, co-founders of Glassnode, an on-chain market intelligence platform, state that Bitcoin holders stepped in to buy the recent dip when Net Realized Profit/Loss had turned negative.
A few #Bitcoin holders were shaken out over the last week, realising losses on-chain.
— Yann & Jan (@Negentropic_) September 15, 2021
Stronger hands stepped in and bought the dip.
As $BTC breaks above $48k, net realised PnL has returned positive, and the market is absorbing those profitable spent coins. pic.twitter.com/ktfWo9mtGF
On the whole, last week’s price crash triggered accumulation from the asset’s long-term holders.
As the hype around “buying the dip” is getting less relevant, retail traders are bearish, and the fear and greed index, an indicator of the market sentiment toward BTC, has turned neutral. These changes are expected to positively impact the asset’s price and push it closer to breakout, fueling a second run to the $65,000 level.
FXStreet analysts have predicted that Bitcoin price could jump to $51,000.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Is Altcoin Season here as Bitcoin reaches a new all-time high?
Bitcoin reaches a new all-time high of $98,384 on Thursday, with altcoins following the suit. Reports highlight that the recent surge in altcoins was fueled by the victory of crypto-friendly candidate Donal Trump in the US presidential election.
Shanghai court confirms legal recognition of crypto ownership
A Shanghai court has confirmed that owning digital assets, including Bitcoin, is legal under Chinese law. Judge Sun Jie of the Shanghai Songjiang People’s Court shared this opinion through the WeChat account of the Shanghai High People’s Court.
BTC hits an all-time high above $97,850, inches away from the $100K mark
Bitcoin hit a new all-time high of $97,852 on Thursday, and the technical outlook suggests a possible continuation of the rally to $100,000. BTC futures have surged past the $100,000 price mark on Deribit, and Lookonchain data shows whales are accumulating.
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange
Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.
Bitcoin: New high of $100K or correction to $78K?
Bitcoin surged to a new all-time high of $93,265 in the first half of the week, followed by a slight decline in the latter half. Reports highlight that Bitcoin’s current level is still not overvalued and could target levels above $100,000 in the coming weeks.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.