As a seasoned analyst with over two decades of experience in the financial markets under my belt, I must admit that the current surge in Bitcoin’s price and the drop in exchange reserves is reminiscent of the dot-com bubble of the late 1990s. However, unlike those days when I was frantically refreshing Yahoo Finance on a dial-up connection, today I find myself glued to my high-speed internet watching the Bitcoin price ticker like a hawk.
The cost of Bitcoin has been increasing significantly, climbing over 4.9% in the past day to reach almost $66,000 currently, having just surpassed $65,000. This surge follows promising signs from on-chain data indicating that supply might be decreasing.
As per information from cryptocurrency analytics firm CryptoQuant, shared on the social media platform X (previously known as Twitter) by analyst TheLordofEntry, the amount of Bitcoin stored on exchanges has reached a record low of 2.6 million BTC. This is a significant decrease from approximately 3.3 million BTC that was observed roughly three years ago.
The amount of Bitcoin held on exchanges has reached a new record low, implying that investors are choosing to keep their Bitcoin instead of selling it.
— TheLordofEntry (@thelordofentry) October 13, 2024
At present, the Bitcoin network continues to operate steadily, showing a considerable amount of transaction activity and address usage. This is largely due to long-term investors consistently adding to their holdings, while there are indications that short-term investors might be offloading their coins.
A decrease in Bitcoin reserves held on exchanges implies that the circulating supply is shrinking, potentially leading to an increase in its price if demand persists or grows, as fewer coins are available for immediate trading. The value of BTC might have recently experienced a boost due to the trustee managing Mt. Gox’s assets extending the distribution timeline of the remaining funds to creditors by another year, pushing it back to October 31, 2025, which could create uncertainty and potentially bolster investor sentiment.
Initially, Mt. Gox was a significant global platform for trading cryptocurrencies, but it suffered a catastrophic hack in 2014 that ultimately led to its downfall. Despite some creditors receiving reimbursement, records indicate that wallets associated with its assets currently possess around 44,900 Bitcoins, valued at approximately $2.8 billion.
The availability of Bitcoin on the market might have decreased due to the recent reopening of the Bitcoin staking protocol, Babylon, for additional BTC deposits. In just under an hour and a half after this announcement, approximately $1.5 billion worth of Bitcoin was invested by investors eager to stake their coins.
Babylon intends to enhance the usefulness of the primary cryptocurrency by introducing a Proof-of-Stake marketplace, which operates using Bitcoin. This marketplace will enable various third-party protocols to utilize it for their security purposes.
One Bitcoin liquid staking method aims to enable Bitcoin owners to earn rewards by locking up their Bitcoins. Alternatively, Bitcoin holders can employ other tactics like lending or options trading to maximize returns on their BTC investments.
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2024-10-14 21:15