Bitcoin has struggled to gain ground in the last month, with a brief foray above $50,000 proving fleeting even as one central bank predicted the price of bitcoin would soon double. The cost of bitcoin peaked at $52,000 per bitcoin early last week. However, later it dropped to less than $45,000 after a viral campaign to prop up the price of bitcoin failed. The crash wiped out roughly $300 billion from the combined bitcoin and crypto market, currently valued at $2.1 trillion.
Now, data shows that bitcoin exchange reserves, or the amount of bitcoin held on platforms such as Coinbase and Binance, had fallen to levels lower than they were in November last year.
According to data from on-chain analytics outlet CryptoQuant, bitcoin exchange reserves have hit new multi-year lows this week. This implies that there is less bitcoin supply that can be quickly sold on the market. When investors transfer their holdings from exchanges to storage, they create a shortage of bitcoin exchange reserves.
The crypto market
Since the crash last week, the crypto markets have shifted into a range-bound environment. They are trading between $43,000 and $47,000, with neither bulls nor bears holding a firm grip. In a note, Marcus Sotiriou pointed to data that showed large bitcoin holders, known as whales, increased their holdings “by roughly 44,000 bitcoin in the past week.
Microstrategy MSTR -3.8 percent is a business intelligence software company with over 100,000 bitcoin. On Monday they announced that they had purchased another 5,000 bitcoin. This means we could see a flood of institutional bitcoin purchase announcements in the coming weeks or months,” Sotiriou wrote, noting that “the remaining buyers of the 98,000 bitcoin [are] unknown.
Meanwhile, technical analysis suggests that the bitcoin price is about to complete a so-called golden cross. This is when the 50-day moving average crosses the 200-day moving average. This isn’t always a bullish sign and could be a lagging indicator. However, some believe a golden cross can support a new upward surge.
The bitcoin market does not appear to be oversold enough to be unmistakably enticing for short- and medium-term buying, but it exhibits buyer interest signals. Alex Kuptsikevch, the senior financial analyst at FxPro, commented via email. This month, Bitcoin has steadily gained support on the downside of a simple 200-day moving average, which is now close to $44,300. The rise from this curve began a 40 percent raise over the next five weeks in early August.