While Bitcoin (BTC) is hovering around yearly highs, a report from CryptoQuant shows that supply on centralized exchanges is at its lowest level in six years.
Whales typically transfer Bitcoin to a centralized exchange for offloading. As they accumulate, they move away from centralized exchanges and into self-custodial solutions.
Therefore, low supply on centralized exchanges is generally considered a bullish signal for cryptocurrency assets. This may indicate that investors have no intention of selling their assets anytime soon. However, there are other factors that investors should pay attention to.
Bitcoin (BTC) Could Surpass $50,000: CryptoQuant
CryptoQuant community member “Papi” shared that Bitcoin supply on centralized exchanges has returned to 2017 levels for the first time. They wrote:
“We are entering our 45th month of declining supply.”
Additionally, according to a CryptoQuant report, Bitcoin could surge to the $50,000-$53,000 range in early 2024. The report cited the Metcalfe price valuation band indicator, which relies on data such as market capitalization, trading volume, and user activity.
Is a short-term correction imminent?
On the other hand, caution was advised considering that 86% of the current distribution volume is in surplus. Moreover, the funding interest rate is also premium. BeInCrypto previously explained:
“The funding rate is a fee that helps keep the price of an asset’s perpetual future contract in balance with the spot price. If a perpetual futures contract is trading at a premium, the long-term trader will pay a funding fee to the short-term trader and vice versa.”
Read more: How to Evaluate Cryptocurrencies Using On-Chain and Fundamental Analysis
Lastly, Ali Martinez, Global Head of News at BeInCrypto: Shared on X (Twitter) Bitcoin enjoys stable support at $42,700. He elaborated:
“This level is important because 642,000 wallets bought 347,000 BTC here.”
If Bitcoin breaches the $42,700 support level, Martinez explained that $38,000 should be the next important area to watch. However, if Bitcoin continues its bullish trend at $42,700, it may visit the next major supply zone at $47,300.
Read more: How to Buy Bitcoin (BTC) and Everything You Need to Know
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