- Bitcoin’s supply on exchanges was shrinking as institutional and sovereign accumulation intensified.
- Market sentiment remained strong despite liquidations, with technicals signaling a potential breakout.
Bitcoin’s [BTC] exchange reserves are nearing 2.5 million BTC, marking a significant supply decline. Over the past year, the reserves have fallen sharply, aligning with Bitcoin’s steady price appreciation.
This trend suggests increasing scarcity, which could strengthen Bitcoin’s long-term bullish outlook.
However, will this tightening supply be the key driver for BTC’s next major rally, or will market sentiment shift before that happens?
The U.S. is stockpiling BTC: How does this impact supply?
At press time, Bitcoin was trading at $88,190.78, reflecting a 4.56% decline in the past 24 hours. However, a major development could transform the market as reports indicate the U.S. government is creating a Bitcoin reserve. This move suggests that BTC is being recognized as a financial asset.
If this trend persists, it could spark a domino effect, prompting other nations to follow suit. Institutional and sovereign accumulation may further reduce BTC’s supply, intensifying its scarcity.
As governments expand their holdings, Bitcoin’s position as an inflation hedge could grow stronger, potentially attracting more long-term investors.
Bitcoin’s technical outlook: What comes next?
Bitcoin’s price chart reveals a descending symmetrical triangle pattern, a formation that often signals an impending breakout.
At the time of writing, BTC was facing key resistance at $94,267 and $99,407. If bulls reclaim these levels, Bitcoin could surge toward $106,766, creating a bullish breakout scenario.
However, failure to break out may lead to a retracement toward $83,728, where strong support lies.
Additionally, the RSI sat at 43.28, indicating BTC is approaching oversold conditions. This could trigger a bounce, particularly if buy-side momentum increases near current levels.
Source: TradingView
Is Bitcoin still profitable for most holders?
As of writing, 75.24% of BTC holders were in profit, having purchased BTC below its current price.
Meanwhile, 21.25% of holders were at a loss, and 3.51% were at break-even.
This distribution reflects strong market confidence, as most investors are holding despite recent short-term volatility.
The high proportion of profitable holders suggests long-term investors continue to dominate the market, lowering the chances of panic selling.
Source: IntoTheBlock
Are addresses and transactions supporting growth?
Daily active Bitcoin addresses have dropped 6.70% in the past week, while zero-balance addresses have fallen 10.40%. However, new addresses have increased by 2.14%, indicating fresh market entrants.
This suggests that despite the short-term decline in activity, BTC continues to attract new users. Additionally, large transactions exceeding $10M have surged by 36%, highlighting institutional engagement.
Source: IntoTheBlock
Liquidation data: Which side is dominating?
BTC’s liquidation data shows a stark contrast, with $43.96M in short liquidations against $116.933M in long liquidations. This indicates that many bullish traders were overleveraged, leading to forced sell-offs.
Additionally, this imbalance suggests that long traders were caught in a correction, triggering liquidation cascades.
However, if Bitcoin stabilizes at key support levels, liquidations could shift in favor of long positions.
Source: Conglass
Conclusively, Bitcoin’s exchange reserves are depleting while institutional and sovereign demand is rising. Additionally, technical indicators suggest Bitcoin is nearing a decisive breakout.
If demand continues outpacing supply, BTC’s next major rally could be imminent. Therefore, Bitcoin’s tightening supply is likely to trigger a significant price surge soon.
