Investors involved with cryptocurrency are looking at the possibility of a significant change in supply, as Bitcoin reserves have dropped to almost a seven-year minimum due to ongoing purchases by institutions.
As of January 13th, the total amount of Bitcoin (BTC) held on cryptocurrency exchanges dropped to approximately 2.35 million BTC. This figure represents one of the lowest levels in nearly seven years, a point last seen in June 2018 when Bitcoin was trading slightly above $7,000, according to data from CryptoQuant.
It seems that the decline in Bitcoin being held on exchanges might be due to ongoing purchases made by institutional investors at a discount, as suggested by André Dragosch, Bitwise’s head of research.
Crypto hedge funds are buying the current Bitcoin dip, the researcher wrote in a Jan. 13 X post:
“1 million beta of global hedge funds’ performance to BTC has increased from its recent cycle lows signaling increasing market exposure to Bitcoin & other crypto assets.”
The decrease in the availability of Bitcoin on trading platforms might trigger a surge in its price due to a sudden imbalance known as a “supply shock.” This happens when there is an increase in demand for Bitcoin while the number of Bitcoins available for purchase reduces, causing the price to escalate further.
In December, US Bitcoin exchange-traded funds (ETFs) purchased approximately three times the number of bitcoins (around 14,000) mined during that period. This was when Bitcoin hit a record high of $108,300 on December 17th, according to CryptoMoon Markets Pro data.
Bitcoin recovery to $100,000 lacks trading activity
2025 looks optimistic for Bitcoin’s growth, but analysts are closely monitoring the $100,000 level as a notable barrier to further price increases. This milestone might slow down its upward momentum before potential additional gains.
According to Bitget Research’s chief analyst, Ryan Lee, though a surge past $100,000 might be impending, the crypto market currently exhibits low trading volume, which could hinder a major upward trend.
The analyst at CryptoMoon mentioned that the market’s feeling seems to be settling down, with less urge to sell implying a possibility of either consolidation or an uptrend if the obstacles are surpassed. Nonetheless, he pointed out that technical analysis shows minimal trading activity on a daily basis, suggesting insufficient strength to breach the existing resistance or support levels.
Beyond Bitcoin, the broader crypto market is also suffering from a lack of trading activity.
The trading activity for several leading cryptocurrencies has dropped to levels not seen in over two months, as reported by market intelligence provider Santiment on their January 13 update. This period of low trading volume precedes the U.S. elections.
“Crypto trading volume has sunk as ‘trading paralysis’ has swept markets. Top projects across Layer 1’s, Layer 2’s, meme coins, and AI last saw this low level of trading on November 4th. The lack of excitement is a sign of FUD, which increases the probability of rebounds.”
Despite lingering doubts, analysts continue to express optimism regarding Bitcoin‘s future direction, as some forecast a peak surpassing $150,000 towards the end of 2025. This bullish outlook is fueled by predictions that the global money supply will expand by a substantial $20 trillion, potentially drawing in approximately $2 trillion in investments into Bitcoin.
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2025-01-13 14:55