Bitcoin is currently hovering near $90,000, experiencing a slight 2% dip in the last 24 hours, igniting discussions about its short-term trajectory. Despite this minor setback, market analysts are observing the emergence of a supply squeeze. Historically, such conditions have led to substantial price surges for Bitcoin. With exchange reserves dwindling and long-term holders accumulating more assets, traders are keenly focused on the market”s potential to leverage this tightening supply as the holiday season approaches.
Recent on-chain data reveals that Bitcoin is entering one of the lowest liquidity phases in its history. Centralized exchanges currently hold approximately 2.76 million BTC, a significant decrease from earlier this year. This downward trend accelerated throughout November and December, coinciding with a slight decline in Bitcoin“s price. Typically, when prices fall, more BTC is deposited onto exchanges as traders prepare for potential sell-offs. However, the current landscape appears different.
Long-term holders and institutional players are withdrawing their coins into secure custody, effectively reducing the supply available for immediate trading. According to Santiment, around 403,200 BTC have exited exchanges over the past year, marking a 2.09% decline in the circulating supply on trading platforms. This reduced availability on exchanges minimizes the risk of abrupt sell-offs. As Bitcoin remains near the $90,000 mark, the ongoing supply contraction indicates robust underlying demand.
A year ago, exchanges held about 1.8 million BTC; this figure has now decreased to closer to 1.2 million. Analysts suggest that if this trend persists, it may lead to a significant supply shock, particularly if accumulation by long-term holders continues at the current pace. This shift in liquid supply has captured the attention of traders who are on the lookout for potential upside as the holiday season approaches.
Market experts maintain that Bitcoin is still following a bullish trend, despite recent fluctuations. Analyst Michael van de Poppe has noted that if buyers can sustain the present price levels, Bitcoin could aim for the $100,000 mark before Christmas. Achieving this target hinges on traders preserving current support levels and avoiding deeper corrections.
Bitcoin Vector highlights that macro liquidity conditions may be shifting favorably for Bitcoin. Historical setups showcasing similar characteristics often resulted in strong price rallies. The combination of low exchange reserves and ongoing accumulation by long-term holders enhances the case for potential upside. Traders are closely monitoring price movements for signals that may trigger a breakout during the holiday season.
Moreover, a tighter supply generally intensifies price movements, especially when paired with increasing demand. Analysts emphasize that a reduction in BTC held on exchanges could limit rapid sell-offs, cultivating a favorable environment for bullish momentum as the year draws to a close. Even though Bitcoin“s recent minor pullback does not necessarily indicate weakness, the interplay of exchange reserves, accumulation trends, and prevailing bullish structures provides a solid foundation for potential gains.
