The Bitcoin (BTC) price has rebounded more than 22% from its August 5 low of $49,557, and analysts believe on-chain and technical indicators suggest the recovery is continuing.
Bitcoin Exchange Supply Plummets
The potential rally in Bitcoin over the next few weeks is evidenced by on-chain data tracking BTC supply on exchanges (blue waves in the chart below).
As of August 23, centralized cryptocurrency exchanges held around 2.68 million BTC, down 11% from the 3.011 million BTC on January 1. This came as Bitcoin’s value rose 43% since the beginning of the year.
Bitcoin holdings on exchanges. Source: CryptoQuant
The decrease in supply on exchanges suggests that traders prefer to hold BTC tokens rather than sell them for other assets or fiat currencies, which increases the potential for Bitcoin to continue its bullish run in 2024, provided demand does not decline.
Perhaps the continued demand for BTC will come from institutional investors pouring capital into spot Bitcoin exchange-traded funds (ETFs). According to data from Farside Investors, U.S.-based spot Bitcoin ETFs have posted positive flows in nine of the last 13 trading days, indicating continued institutional interest in these investment vehicles.
Spot Bitcoin ETF Flow Chart. Source: Farside Investors
However, on-chain data tracker CryptoQuant reports that inflows into spot Bitcoin ETFs are declining, and are now a fraction of the March totals. Last week’s daily average was 1,300 BTC.
Analysts at CryptoQuant noted that strong institutional demand via spot Bitcoin ETFs is needed for Bitcoin to hit new all-time highs.
“A recovery in spot ETF buying is essential to boost overall Bitcoin demand, potentially leading to a corresponding price rally.”
Bitcoin whales are accumulating
According to data tracked by Santiment, strong demand for Bitcoin continues to emerge from large addresses.
In particular, Bitcoin whale addresses holding 100 to 1,000 BTC have accumulated over 94,700 coins over the past six weeks.
“While price uncertainty has driven many traders away from cryptocurrencies, major stakeholders (Bitcoin whales) are packing up.”
Total BTC held by 100-1K wallets. Source: Santiment
This coincides with a 13% increase in Bitcoin’s market cap since its July 5 low of $53,550, suggesting that whales have been accumulating tokens during the dip. In short, Bitcoin’s large holders believe that the value can rise further in the coming months.
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Bitcoin price breaks out of pennant
The Bitcoin price has been consolidating in an upward trend since bottoming at $49,557 on August 5.
A bull pennant is a bullish continuation pattern that occurs when an asset consolidates in a price range like a triangle after a strong uptrend. It usually breaks out of the range and targets profit at a length equal to the width of the triangle.
Bitcoin price seems to be eyeing a similar breakout scenario in the coming weeks. It is currently trading near the upper trendline of the pennant at $60,300. If the bulls remain above that resistance level, the upside breakout target would be around $68,000, a 12.4% increase from current price levels.
BTC/USD daily chart. Source: Trading Feeand
On August 22, Bitcoin broke above $61,800, which saw the price flip the 200-day exponential moving average (EMA) at $59,446 as support again. This added to the strong support Bitcoin was enjoying in the downtrend, as evidenced by data from IntoTheBlock.
According to the IOMAP (In/Out of the Money Around Price) model, the 200-day EMA is within the price range of $58,653 to $60,465, and in this range, about 1.77 million addresses bought about 919,470 BTC.
Bitcoin IOMAP chart. Source: IntoTheBlock
Increased buying in this demand zone could potentially push Bitcoin prices higher in the coming weeks, supporting a positive outlook for BTC.
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.