Bitcoin’s (BTC), price rise above $64,000 coincides with a significant drop in its reserves across all of the exchanges.
CryptoQuant, a South Korean blockchain analytics company, reported that the Bitcoin amount in exchanges’ wallets fell to as low at 2.379 million BTC earlier in the week. This is the lowest level in over three years. The current reserves are 2.38 million BTC.
Bitcoin’s entire exchange reserve Source: CryptoQuant
CryptoQuant observed that declining Bitcoin reserves indicated a decrease in the supply of BTC tokens for “selling, altcoins buying, and margin trading.” This also indicated traders’ intent to “HODL” the cryptocurrency.
Whales and fishes are increasingly interested in Bitcoin.
However, cryptocurrency’s demand seems to be increasing among retail and institutional traders. The record highs of 10.510 and 16.67 million, respectively, were attained by wallets that hold more than $100 million and $10 million of BTC, respectively.
Bitcoin addresses that have a balance of more than $100 or $10 million. Source: Messari, CoinMetrics
Willy Woo, an on-chain analyst, published a report in August 2021 comparing Bitcoin’s rising demand to its “supply shock”. He concluded that the cryptocurrency’s per-token worth should not exceed $55,000
The “conservative target” was lower than PlanB’s pseudonymous $135,000 price projection for 2021 based on its stock/flow model.
October 19, 2021 — PlanB (@100trillionUSD).
PlanB’s Bitcoin price prediction, November 2021, is at $98,000. This is above $70,000, which is the preferred strike target for options expiring on 26th June 2021, as shown in this chart.
BTC Options OI by strike Price (expiry Nov 26, 2021). Source: ByBt.com
BTC price macro fundamentals
Wall Street adoption is likely to increase Bitcoin’s bullishness on-chain fundamentals.
ProShares was the first ETP company to launch an ETF (exchange-traded fund) based on Bitcoin Futures on Tuesday’s New York Stock Exchange. The listing was a significant step forward in Bitcoin investing opportunities. It opened up new avenues for institutional investors to get exposure to BTC.
Fundstrat Global Advisors co-founder Tom Lee stated that he expects the Bitcoin ETFs will attract at least $50 Billion in the next twelve months. This is in addition to reaffirming his team’s $100,000 price target for BTC at the end of the year.
The technical picture of Bitcoin seemed to be headed towards its record high at $65,000. Now, it is acting as a resistance.
BTC/USD daily price chart featuring Fibonacci retracement levels. Source: TradingView
The flip side is that Bitcoin’s relative strength indicator (RSI), a momentum indicator which analyzes an asset’s overbought/oversold signals reported that the cryptocurrency price was too high on the daily candle charts, suggesting that a pullback may be in the offing.
Related: Bitcoin’s highest daily close ever as the BTC/Euro pair reaches all-time highs
If Bitcoin is corrected, its next support target would be $57,500. This serves as the 78.6% Fib Level of the Fibonacci Retracement graph. It’s drawn between the $65,000 swing high and low at $30,000, and it could serve as Bitcoin’s next support level.
This level coincides also with Bitcoin’s exponential moving average of 20 days (the green wave in this chart). This level was previously used as support in Bitcoin’s recent uptrend.
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Eileen Wilson –Technology and Energy
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