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Bitcoin Exchanges Hit Seven-Year Low! Upcoming Supply Shock Could Delight Bulls - Coin Bulletin
According to CryptoQuant data, the total Bitcoin reserves in all cryptocurrency exchanges reached its lowest level since June 2018, dropping to 2.35 million BTC as of January 13th.
This decline in Bitcoin reserves is particularly associated with the purchases of institutional investors. Bitwise Research President André Dragosch noted that institutional participants consider the current price declines as an "opportunity for discount". Dragosch stated that hedge funds' market exposure to Bitcoin is increasing, indicating growing interest in crypto assets.
Bitcoin spot exchange-traded funds (ETFs) in the US purchased approximately three times the amount of about 14,000 BTC produced by miners in December. This demand contributed to Bitcoin reaching its all-time high of $108,300.
A Critical Period for Bitcoin Price
The decrease in Bitcoin supply on exchanges can create a significant supply shock on the market. Supply shock occurs when demand is high but the amount of BTC in the market is low, which can lead to rapid price increases.
The decline in Bitcoin reserves is considered a sign of a possible price rally in the market. Decreasing supply and increasing institutional demand increase the likelihood of Bitcoin's short-term rebound. However, investors should closely monitor market dynamics and macroeconomic developments.