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Decreasing reserves mean a decline in Bitcoin supply for selling, altcoin purchasing and margin trading.
Bitcoinâs (BTC) ongoing price rally above $64,000 has coincided with a substantial drop in its reserves across all exchanges.
According to data provided by CryptoQuant â a South Korea-based blockchain analytics service â the amount of Bitcoin held in exchangesâ wallets dropped to as low as 2.379 million BTC earlier this week, the lowest in more than three years. Currently, the reserves are around 2.38 million BTC.
Bitcoin reserves across all exchanges. Source: CryptoQuant
CryptoQuant noted that the declining Bitcoin reserves showed the availability of fewer BTC tokens âfor selling, altcoins purchasing, and margin trading.â Additionally, that also reflected tradersâ intention to âhodlâ the cryptocurrency.
Demand for Bitcoin grows among whales and fishes
On the other hand, the cryptocurrencyâs demand appears to have been increasing across retail and institutional traders, with the number of wallets holding more than $100 and $10 million worth of BTC reaching their record high of 16.67 million and 10,510, respectively.
Bitcoin addresses with balance greater than $100 and $10 million. Source: Messari, Coin Metrics
On-chain analyst Willy Woo published a report in August 2021 that discussed Bitcoinâs âsupply shockâ against its rising demand, concluding that the cryptocurrencyâs per-token worth should be at least $55,000.Â
The âconservativeâ target remained lower than pseudonymous analyst PlanBâs $135,000 price projection by the end of 2021, based on his stock-to-flow model.
$63Kâ https://t.co/tj6SSwSzKR
â PlanB (@100trillionUSD) October 19, 2021
Meanwhile, PlanBâs Bitcoin price prediction for November 2021 sits around $98,000, above $70,000, the most preferred strike target for the options expiring on Nov. 26, as shown in the chart below.
BTC options OI by strike price (expiry Nov. 26, 2021). Source: Bybt
BTC price macro fundamentals
Bitcoinâs bullish on-chain fundamentals are likely to see further strength from Wall Street adoption.Â
On Tuesday, ProShares became the first exchange-traded product firm to launch a Bitcoin futures-based exchange-traded fund (ETF) on the New York Stock Exchange. In a milestone for Bitcoin investing opportunities, the listing opened a new road for institutional investors to gain exposure to BTC.
For instance, Fundstrat Global Advisors co-founder Tom Lee said he anticipated Bitcoin ETFs to attract at least $50 billion in the coming 12 months, reasserting his teamâs year-end $100,000 price target for BTC.
Technically, Bitcoin appeared to be heading toward its record high near $65,000, now acting as a resistance level.
BTC/USD daily price chart featuring Fibonacci retracement levels. Source: TradingView
On the flip side, Bitcoinâs relative strength index (RSI), a momentum indicator that analyzes an assetâs overbought/oversold signals, reported the cryptocurrency price as excessively high on the daily candle chart, suggesting that a pullback is on the table.Â
Related:Â Bitcoin sees its highest ever daily close as BTC/Euro pair hits all-time highs
Should a correction happen, Bitcoinâs next support target could be near $57,500, which serves as the 78.6% Fib level of the Fibonacci retracement graph, drawn between the $65,000 swing high and the $30,000 swing low.
The level also coincides with Bitcoinâs 20-day exponential moving average (the green wave in the chart above). The said level has earlier acted as strong support during Bitcoinâs uptrend.Â
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.