Over the past four days, Bitcoin has reached a new peak for 2024, dating back to February 12th. This bullish momentum has been fueled by investors shifting $1.6 billion worth of Bitcoin into long-term storage.
This move comes amidst heightened buying pressure from investors pouring funds into newly launched spot ETFs, driving Bitcoin’s market capitalization up by over $200 billion in the first half of February alone.
Despite the positive price action and record-breaking fund inflows, critical on-chain data trends indicate that the rally may not be over yet.
CryptoQuant’s exchange reserves metric, which tracks changes in the number of BTC coins deposited on exchanges, shows a significant decline in exchange reserves.
On January 25th, exchange reserves stood at 2.1 million BTC, but as of February 15th, this figure has dropped by 31,255 BTC to just over 2 million BTC. At the current price of $52,000, this implies that $1.6 billion worth of BTC has been taken off exchanges as investors opt for long-term storage.
This reduction in exchange reserves signifies a decrease in the supply of BTC available for trading on exchanges. While this may be temporary, it often has a positive impact on short-term price action.
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It suggests that most investors are looking for future gains rather than short-term selling opportunities at current peak prices. Additionally, the relative scarcity created by the dwindling market supply tends to drive prices higher with each new wave of demand.
With Bitcoin ETF sponsors buying up Bitcoin, this bullish catalyst is expected to push the price towards the $60,000 milestone in the days ahead. However, in the short term, bullish traders may face a major obstacle around the $55,500 area.
IntoTheBlock’s in/out of the money (GIOM) data shows that 462,640 addresses have acquired 228,000 BTC at a minimum price of $55,595. If these holders decide to book profits as Bitcoin approaches its break-even price, it could create a roadblock for further price appreciation.
Despite this potential hurdle, if the bulls can break decisively above the $55,500 resistance level, a retest of $60,000 could be on the cards, as predicted by analysts.