Bitcoin Price Could Experience Volatility as Investors Withdraw 480,000 BTC
The amount of Bitcoin deposited in exchange wallets has decreased to its lowest level since January 2018. This withdrawal trend signifies a shift in investor behavior, and it could impact the price of Bitcoin in the coming days. Despite recent challenges, Bitcoin holders are choosing to move their assets off exchanges, indicating a long-term investment approach.
Bitcoin Investors Are Holding for Future Gains
According to on-chain data compiled by Cryptoquant, Bitcoin deposited in exchange wallets has dropped to a 5-year low. As of August 24, there are only 2.05 million BTC in exchange reserves, the lowest level since January 2018.
This decline in exchange reserves indicates that investors are choosing to hold onto their Bitcoin for potential future gains. In the month of August 2023 alone, investors have withdrawn a total of 480,000 BTC.
When exchange reserves decline during a market downturn, it suggests that investors have confidence in the long-term prospects of Bitcoin. If this trend continues, it could lead to a significant price increase when the overall market sentiment becomes more bullish.
The Holding Could Persist for a While Longer
Another indicator that supports the idea of long-term holding is the Market Value to Realized Value (MVRV) ratio. This ratio tracks the net financial position of Bitcoin holders. Based on the MVRV chart, most investors who acquired BTC in the past 30 days could earn a profit of 6.4% if they sell early.
Historical trends suggest that current investors are likely to continue holding their Bitcoin until they break even around the $28,000 range. With Bitcoin currently trading around $26,000, it is unlikely that a significant influx of BTC will be deposited into exchanges. If the supply on exchanges continues to decline, it could trigger a surge in demand and result in double-digit percentage gains for Bitcoin.
BTC Price Prediction: Possible Rebound Toward $28,000
Based on the data, there is a possibility that Bitcoin’s price could rebound and reclaim the $28,000 level. The In/Out of Money Around Price data, which tracks the purchase price distribution of current BTC holders, supports this prediction. However, it also indicates that there might be initial resistance around the $27,000 territory. If holders who bought BTC at the maximum price of $27,200 decide to book profits early, it could lead to a bearish reversal.
On the contrary, if bulls can push past the resistance, Bitcoin’s price might surge towards $28,000. It is important to note that a drop below $25,000 could invalidate this prediction.
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