Bitcoin has maintained its position above $60,000 for the last two weeks, showing resilience as the overall crypto market expands. This consistent performance is spurring optimism among both traders and investors.
Data from CryptoQuant indicates that short-term holders are now capitalizing on their profits, resulting in a significant decline in BTC supply. This drop in available BTC points to a potential supply crunch as demand continues to grow, particularly following the recent interest rate cuts by the Federal Reserve.
Leading analysts and investors see this as a positive indication, with many speculating that Bitcoin could be on the brink of another significant rally. As demand surpasses supply, traders are becoming increasingly hopeful for a spike in BTC prices in the upcoming weeks.
However, an important level to monitor remains $70,000—breaking through this resistance would provide the confirmation essential for Bitcoin to maintain its upward momentum. Until then, market participants are meticulously analyzing the charts, looking for signals of a sustained breakout.
Bitcoin Supply Indicates A Potential Rally
Bitcoin has made a significant upward move, generating both excitement and caution among traders. While some interpret this as the beginning of a new rally, others worry it could be a bull trap, potentially leading to a sharp pullback. Prominent on-chain analyst Axel Adler has offered his perspective on this discussion, sharing an engaging report on X.
Adler notes that short-term holders (STHs) are starting to sell their coins for profit, highlighted by a green circle on his chart. Nevertheless, a decrease in STH supply by 1.31 million BTC implies a more optimistic outlook.
The circulation of Bitcoins among STHs is diminishing, which is typically associated with active trading. This decrease in supply, combined with a growing number of holders opting to HODL, reflects an increasing confidence in BTC’s long-term prospects.
In the chart shared by Adler, depicting the BTC STHs Supply and Profit Loss Sell metrics, it’s noted that Bitcoin’s current STH supply is at 3.94 million, a notable drop from 5.25 million in April.
The reduced supply signifies that fewer short-term traders are entering the market, which bolsters Bitcoin’s price. Investors are becoming more optimistic that this decrease in supply will lead to rising prices in the near future, strengthening the belief that BTC may be on the verge of a new rally.
BTC Technical Analysis: Key Levels To Monitor
Bitcoin is currently trading at $63,617 after experiencing a 4% dip, while testing the daily 200 moving average (MA) at $63,719 as a support level. This is a critical area for BTC, as the price has struggled to maintain a position above this indicator since early August. Sustaining this level is crucial for bulls to maintain upward momentum and avoid further downside risks.
If the price maintains above the daily 200 MA, it could signal renewed strength, enabling Bitcoin to recover the $65,000 mark. This would likely pave the way for a stronger advance toward higher supply levels and potentially initiate a new bullish phase.
Conversely, if BTC is unable to sustain its position above this essential support, a deeper correction may ensue. A failure to close above the 1D 200 MA could lead to a pullback towards lower demand levels around $60,500, a crucial support zone historically. Traders and investors are closely monitoring this area, as the next few days will be critical for Bitcoin’s short-term pricing movements.
Featured image from Dall-E, chart from TradingView
