Investor confidence in the cryptocurrency market seems to be growing lately, and Bitcoin is a major beneficiary of this positive trend. As a result, there has been continued accumulation of BTC among gigantic investors, despite somewhat frustrating price action.
The price of the top cryptocurrency may have ended below the psychological mark of $70,000 in May, despite touching that level several times in the last two weeks of the month. The latest on-chain data suggests that faith in Bitcoin continues to grow.
Is BTC prepared for price increases?
Prominent cryptocurrency analyst Ali Martinez shared via: write to X a platform where significant amounts of Bitcoin escape from centralized exchanges. This on-chain observation is based on the CryptoQuant Exchange Reserve metric, which tracks the amount of a specific cryptocurrency in the wallets of all centralized exchanges.
The boost in the metric value indicates that investors are making more deposits than withdrawals of crypto assets (Bitcoin in this scenario) to centralized exchanges. Meanwhile, when the value of the metric drops, it means that more coins are flowing out of trading platforms than into them.
According to Martinez’s post, over 37,000 BTC (worth approximately $2.53 billion) has been transferred from cryptocurrency exchanges in the last three days. This significant exodus of funds indicates a change in sentiment and long-term holding strategy among Bitcoin investors.
While it is complex to determine the exact reason for the massive outflow of funds from exchanges, the flow of funds from trading platforms suggests an boost in investor confidence. This means that many investors may be won over by Bitcoin’s future promise, thus choosing to hold their assets in self-directed wallets for the long term.
Moreover, the downward spiral of Bitcoin supply on centralized exchanges may trigger an boost in the price of the most vital cryptocurrency. A persistent decline in BTC balances on exchanges may result in a supply collapse.
In context, a supply crunch refers to a scenario or period in which the supply of a particular asset is lower than the demand for it, causing the value of the asset to skyrocket.
Bitcoin price at a glance
At the time of writing, Bitcoin is trading at around $67,489, reflecting a 1.5% decline over the last 24 hours. This sluggish performance over the last day underscores the major cryptocurrency’s struggles over the past week. According to CoinGecko data, the BTC price has fallen by almost 2% over the last seven days.
Featured image from iStock, chart from TradingView
