Bitcoin Exchange Reserves Drop – Is a Breakout Brewing?

Since last week, the Bitcoin price has been grappling with the $108,000 barrier, which has also limited the recovery momentum in the altcoin market. Despite the sluggish trend, the on-chain data highlights a consistent decline in $BTC exchange reserves and miners’ OTC balances, which historically aligned with major bullish cycles. Is the pioneer cryptocurrency ready for a new high?

Bitcoin Exchange Reserve and OTC Balances Signal Looming Supply Shock

Over the past week, the Bitcoin price has showcased a sharp recovery, rising from $98,420 to $107,638, representing a 9.58% increase. The bullish momentum has currently slowed down at $108,000, but a series of on-chain data points to a bullish structure for $BTC.

According to CryptoQuant analyst IT Tech, Bitcoin reserves on the exchange have recently dropped to 2.45 $BTC, its lowest level since March. The consistent decline in exchange holdings reduces sell-side pressure as coins are moved from trading platforms to long-term custody or cold storage.

Bitcoin Exchange Reserved | CryptoQuant

A similar downtrend is observed in OTC balances, which miners and institutions primarily use for large private transactions. The current miner OTC holding stands at 156.6k $BTC, marking a multi-year low.

Over-The-Counter | CryptoQuant

“Both falling exchange reserves and diminishing OTC balances indicate that short-term liquid supply is tightening, especially from miners,” the analyst added.

Historically, such a decline in these metrics has often led to major upside trends.

$BTC Hints at Last Pullback Before Flag Breakout

By press time, the Bitcoin price trades at $107,601 with an intraday loss of 0.72%. Despite the downtick, the daily candle shows a notable rejection tail, accentuating the demand pressure on the lower side.

Thus, the coin price could continue its sideways trend below the pattern’s resistance trendline before providing a sustainable breakout. If materialized, the $BTC price could surpass the all-time high resistance of $112,000 and take an initial leap to $119,000, followed by an extended carry to $137,000.

$BTC/USDT – 1d Chart

On the contrary, if supply pressure at the $108,000 resistance persists, the price could fall below the 20-day exponential moving average, signaling a continued correction.

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