Sustained Bitcoin Bull Run as BTC Holdings on Exchanges Diminish

Posted on 30/01/2024 | 469 Views

The race for Bitcoin Exchange Traded Funds (ETFs) is heating up, with market speculation about an $8.5 trillion (AU$12.84 trillion) asset manager, Charles Schwab, entering the fray. This comes as Bitcoin (BTC) balances on exchanges have significantly reduced, with over one million BTC leaving exchange wallets since 2020. This decrease in available BTC on exchanges, combined with a sustained price level above US$42,000 (AU$63,420), paints a bullish picture for Bitcoin’s near-term recovery.

A recent analysis by Bloomberg ETF expert Eric Balchunas suggests that Charles Schwab's potential entry into the Bitcoin ETF market could escalate the competition. Despite no official spot Bitcoin ETF from Schwab yet, the implication of such a move is substantial. Crypto analyst Joe Burnett highlights a crucial on-chain development - the departure of over one million BTC from exchange wallets since 2020. Given Bitcoin's capped supply of 21 million, this exodus is a significant factor underpinning BTC's bullish potential.

BTC’s forthcoming halving event, expected to occur in about 74 days, further fuels this optimism. Historically, Bitcoin has reached new all-time highs following its halving, where mining rewards are cut in half. This upcoming halving will reduce the reward from 6.25 to 3.125 BTC per block.

An additional supportive on-chain metric is the trend in Bitcoin addresses holding less than 1 BTC. Data from Glassnode indicates these addresses have been declining since BTC’s local peak of US$49,000 (AU$74,990).

Bitcoin's current bull run seems sustainable, as evidenced by Glassnode data showing a continuous rise in the short-term holder's realised price. This trend suggests that Bitcoin is being acquired at increasingly higher prices, bolstering the asset’s upward trajectory and supporting the possibility of a BTC recovery.

The spotlight on Bitcoin’s Spot ETF products is growing. Notably, Harvest Hong Kong, a major Chinese fund company, recently submitted an application for a BTC Spot ETF to the Hong Kong Securities and Futures Commission – a pioneering move in the region.

From a technical standpoint, Bitcoin’s price has maintained above the critical US$42,000 (AU$63,420) mark, recovering from its recent dip. BTC is facing potential resistance at US$43,600 (AU$66,056) and US$45,589 (AU$68,940). Should Bitcoin surpass these levels, a recovery to the US$45,000 (AU$67,950) level appears increasingly probable.

However, if Bitcoin were to close a daily candlestick below US$40,000 (AU$60,400), this could negate the bullish scenario, potentially leading BTC to a support zone between US$38,155 (AU$57,614) and US$38,555 (AU$58,318).


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