Bitcoin’s price surged above $65,000 on May 6, marking the first time in 10 days that it reached this level. The recent decrease in BTC supply on exchanges indicates that there could be further upside potential as the month progresses.
In the past week, the price of Bitcoin has made an impressive recovery of 15.7% after initially dropping to a 60-day low of $56,537 on May 1.
The analysis by TheCryptoBasic had previously predicted that the US Non-Farm Payrolls report could stimulate bullish activity among investors. The recent movements of BTC coins across major crypto exchanges confirm this thesis.
A chart provided by Santiment shows the real-time changes in the supply of BTC coins deposited on trading platforms and exchange-hosted Bitcoin wallets.
According to the chart, as of May 1, investors held 823,180 BTC on exchanges. However, since then, they have withdrawn 4,550 BTC into cold storage, reducing the total Bitcoin supply on exchanges to 818,630 BTC.
A significant decrease in exchange deposits often leads to an upward price movement for the underlying crypto asset for several reasons. Firstly, when investors transfer coins into long-term storage, it signals a positive outlook and a preference for holding onto their investments. However, it also inadvertently reduces the supply available for trading on exchanges. When this coincides with a period of high demand, it creates the conditions for a rapid rally as buyers compete for a limited number of coins.
At the current BTC price of $64,800 per coin, investors have effectively removed over $290 million worth of Bitcoin from the short-term market supply since the beginning of May. As a result, BTC prices have surged by 15% during this period.
Looking ahead, if the decline in BTC exchange supply continues, it is possible that the Bitcoin price could retest $70,000 in May 2024.
In terms of key resistance levels to watch, IntoTheBlock’s GIOM data suggests that the $66,300 range poses the biggest threat to Bitcoin’s reclaiming of $70,000. The data shows that 2.86 million active addresses acquired 1.61 million BTC at a minimum price of $65,571. If these addresses decide to take profits as the Bitcoin price approaches $66,000, it could lead to a pullback in the rally.
However, if Bitcoin demand increases further while the exchange supply decreases, the BTC price could experience a parabolic breakout above the $66,000 resistance and head towards $70,000 as previously predicted.
On the other hand, in the event of another major market downturn, BTC bulls can rely on the $58,750 range for short-term support.
It is important to note that this article is for informational purposes only and should not be considered financial advice. The views expressed in this article are the author’s personal opinions and do not reflect the opinion of The Crypto Basic. Readers are advised to conduct their own research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.