Bitcoin traders are expecting a bullish momentum in prices in the short and medium term following a substantial drop in the supply of BTC on exchanges in recent days. Cryptocurrency exchanges have lost a combined total supply of around 40,000 BTC in the last three weeks according to Glassnode analysts.
“This represents roughly 28% of the total 140,000 BTC inflow seen since the local low set in April. The exchange balances we track currently have 2.56 million coins. "
This supply is the amount that comes from known sources, such as mining pools, independent miners, and large wallet holders. A drop in supply to exchanges means more demand and a higher price. The biggest reduction in the supply of BTC to exchanges occurred in the past two days, where it fell by more than half.
Furthermore, the exit from exchanges has been happening slowly in recent weeks at an exit rate of 2,000 BTC per day.
During the beginning of the year, a large amount of BTC was moving out of cryptocurrency exchanges on its way to the grayscale GBTC Trust and institutional coffers. And although this trend was reversed at the end of May, exits from exchanges continue to top inflows.
The probability of an upward price movement in the short to medium term is strengthened by increasing HODL's conviction to sell BTC. Additionally, demand for leveraged Bitcoin derivatives has fallen, similar to that for options and futures. This would mean that spot prices on crypto exchanges will greatly influence the volatility of cryptocurrencies and therefore prices.
Meanwhile, the hash power of BTC, which plummeted by more than 55% last week after massive crackdowns and departures from China's mining group, is returning to normal. This week, the recovery is 29%, or the percentage of the mining hash rate that has come back online, according to data from Glassnode.
This week, analysts continued to strengthen the belief that Bitcoin miners had successfully migrated to new ground after China's crackdown. This, according to them, has helped in the recovery of the hash rate. It may be the other factor that pushes prices higher.
According to market viewers, the current decrease in transaction fees that is being witnessed may mean a decrease in pressure from the sell side. Also, an increase in chain withdrawal fees means that people would rather accumulate than sell BTC.