Bitcoin Exchange Reserves In Swift Decline, Bulls Expect Price Rebound

Bitcoin (BTC) exchange reserve continues its progressive decline, signaling price recovery expectations. The last crypto dip saw the asset plunge below $100k as billions in value were liquidated. For most traders, light shines at the end of the tunnel following investor accumulations as funds flow out of centralized exchanges. Institutional demand remains a major factor behind flash upticks recorded in mid-day trading.

Supply Shock Can Drive The Next Rally

A new CryptoQuant report points to reduced Bitcoin centralized exchange reserve, a metric that marks the beginning of an uphill movement. Historically, bull cycles have seen accumulation and transfers to other custodians, signaling long-term holding. After the BTC price dropped below $98K, whales began repositioning holdings, as seen in the exchange reserve charts.

At the moment, exchange reserves are below 3 million, with additional signs of growing bull activities. Asides exchange volumes, miners reserves are on the rise with expected hodling until the asset breaks the all-time high. Crypto miners offload assets in a bear market to recover losses but tend to hold in bull seasons. This played out in 2022 amid the crypto winter that saw BTC price plunge to yearly lows.

While miner sales spiked, figures dropped in Q1 2023, fueling the recovery phase. At the same, institutional investors longed to spot BTC ETFs projecting mass adoption in the crypto leader.

“Bitcoin’s exchange reserves have been on an aggressive decline, signaling an accumulation phase by investors. This suggests that market participants are withdrawing their BTC from exchanges and moving them into self-custody, reducing the circulating supply available for trading. Given that exchange reserves serve as a supply-side indicator, this persistent decline could contribute to further price appreciation in the coming weeks.” CryptoQuant wrote. 

What’s Next For BTC Price?

Bitcoin price slipped to $96,405, although sentiments spiked among whales. The status quo comes on the heels of negative macroeconomic factors and fears looming the U.S. trade wars. Last week, the launch of DeepSeek sent US tech stocks downward, impacting crypto assets.

Market analysts expect a recovery in Bitcoin followed by inflows to altcoins as positives trickle in. The Bank of England’s decision to lower policy rates can fuel local traders with an impact on US markets. Interest rate cuts result in an uptick because of fund flows into risky assets. On Feb 5, Standard Chartered set the BTC price target at $500K by 2025.