Bitcoin price action may be struggling, but we can hope for a sell-side liquidity crisis

The latest data shows that the number of BTC available on exchanges is about to hit an all-time low. According to analysis from CryptoQuant, exchange reserves have returned to all-time lows, last seen in early May. Meanwhile, Bitcoin price is changing hands at $45,086, recorded an 11% drop in the past seven days.


BTC/USD 4-hour chart | Source: TradingView

Exchange reserves near-record low, with traders eyeing $43,000 Bitcoin price support

Today, the latest date for which figures are available, there are 2,399 million BTC available on major exchanges. The low of May was 2,390 million. Bitcoin traders have thus reversed a deposit trend that ensued during the mid-May price upheaval, which points to a clear return to an investment-focused – not speculation-focused – mentality.

“BTC supply on exchanges is about to break its previous low. Hope to see another sell-side liquidity crisis on Bitcoin”, Ki Young Ju, CEO of on-chain analytics platform CryptoQuant, stated.


Bitcoin exchange reserves vs. BTC/USD chart | Source: CryptoQuant

The supply section, which last moved one to two years ago, reached a three-year low. Those who last moved BTC to an address between September 2019 and September 2020 are, therefore, not touching their holdings.


BTC supply last active 1-2 years ago chart | Source: Glassnode/Twitter

Bitcoin price continues to trade below $46,000 at press time. BTC has entered a bear market, with neighboring levels raised to support. This is $45,700, which will give way to $43,000 to $44,000 if it fails.

On the upside, we also know that $46,700 is still a fundamental resistance level. If that cracks, the likelihood of us breaking through $47,500 to $50,000 is significant, and that will give strength to the altcoin market as altcoins will continue to function.


Buy the dip search volumes were soaring | Source: Santiment

A huge contributor to this was the social trend of buying the dip. This trend primarily motivated investors to jump into the market as social tools observed this term soared to a 4-month high. At the time of writing, the indicator had climbed back to its May levels.

So far, it is good to see long liquidations cooling off, a signal of weakening sell pressure. Considering large holders of older coins are not selling, and near-term momentum on the 4-hour chart is slowly trending higher, it’s possible BTC has found a bottom and will begin the recovery process to reclaim $50,000. The near-term chart may look scary, but the overall trend in fundamentals, technicals, and on-chain remain firmly bullish and strong suggests higher prices in the coming weeks and months.

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