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On May 6, Bitcoin’s price broke above $65,000 for the first time in 10 days. The recent decline in $BTC supply on exchanges suggests more upside could follow as the month unfolds.
Investors Shift $290M $BTC as Price Surges 15% in May 2024
Bitcoin price has made a remarkable 15.7% recovery in the past week after initially declining to a 60-day low of $56,537 on May 1.
Recall that TheCryptoBasic analysis had predicted that the US Non-Farm Payrolls report could spur bullish activity among investors. Recent on-chain movements of $BTC coins across prominent crypto exchanges confirm that thesis.
Santiment’s chart below illustrates real-time changes in the supply of $BTC coins deposited on trading platforms and exchange-hosted Bitcoin wallets.
The chart above shows that investors held 823,180 $BTC on exchanges as of May 1. However, since then, investors have withdrawn 4,550 $BTC into cold storage, reducing the total Bitcoin supply on exchanges to 818,630 $BTC.
Such a large decline in exchange deposits often triggers an upward price movement for the underlying crypto asset for a few reasons.
Firstly, when investors shift coins into long-term storage, it signals a confident outlook and preference for HODL. However, it also inadvertently reduces the supply readily available to be traded on exchanges. And when this coincides with a period of high demand, it sets the stage for an accelerated rally as buyers compete for fewer coins.
Valued at the current $BTC price of $64,800 per coin, investors have effectively pulled over $290 million worth of Bitcoin from the short-term market supply since the start of May. Unsurprisingly, $BTC prices have surged 15% during that period.
$BTC Price Forecast: Road to $70k?
Bitcoin’s price is $64,000 at the time of writing on May 7, up 1.31% within the daily timeframe. However, if the $290 million decline in $BTC exchange supply persists, the Bitcoin price could be set for a $70,000 retest in May 2024.
In terms of key resistance areas to watch, IntoTheBlock’s GIOM data suggest the $66,300 treasury poses the biggest threat to Bitcoin’s reclaiming of $70,000.
As seen below, 2.86 million active addresses acquired 1.61 million $BTC at a minimum price of $65,571.
Having held at a loss for nearly a month, many of them could opt to take some early profits as the Bitcoin price approached $66,000, inadvertently pulling back the rally.
If Bitcoin demand surges further amid the declining exchange supply, $BTC price could stage a parabolic breakout above the $66,000 resistance and head toward $70,000 as predicted.
On the other hand, in the event of another major market pullback, $BTC bulls can rely on the $58,750 cluster for short-term support.