🌎 Bitcoin Consolidation as Exchange Reserves Continue to Decline

Bitcoin Price Consolidation Amid Declining Exchange Reserves

The Bitcoin price remained in a consolidation phase even as the amount held on exchanges continued to decline. On October 8, Bitcoin was trading at $62,540, slightly below this week’s high of $64,500. This follows a correction after falling 15% from its highest point this year.

Despite this correction, Bitcoin still has potential catalysts that could push its price higher in the coming months. Data shows that Bitcoin reserves on exchanges have continued to fall, reaching a year-to-date low of 2.34 million. It is estimated that Bitcoins worth over $31 billion have been removed from exchanges since February. Most of these coins have moved to self-custody wallets, while others have been transferred to exchange-traded funds.

Exchange Outflows: A Bullish Indicator

Flows from exchanges to wallets are often a sign that most holders are bullish. Prominent companies such as MicroStrategy, Marathon Digital, Block, and Tesla are among the most bullish in the industry. For instance, MicroStrategy has accumulated over 252,000 Bitcoins, while Marathon holds 26,842 coins. Tesla and Block, formerly known as Square, hold 9,720 and 8,211 coins, respectively.

Stablecoin Holdings and Market Sentiment

Additional data indicates that smart money holdings of stablecoins have dropped to their lowest level in years. The figure peaked at 38.5% in May 2022 and rebounded to 35.7% in November of the same year. It has been in a strong downtrend since then, suggesting that smart money is mostly bullish on cryptocurrencies.

Technical Analysis: Key Support and Resistance Levels

On the daily chart, Bitcoin has remained within a descending black channel that connects the highest and lowest swings since March. This channel can be viewed as a falling broadening wedge, a popular bullish sign. Additionally, Bitcoin has found support at the 200-day Exponential Moving Average (EMA), which is a positive indicator.

However, Bitcoin has formed a small evening star candlestick pattern, characterized by a small red body and a long upper shadow. Therefore, Bitcoin will need to rise above the upper side of the shadow pattern at $64,500. After that, bulls will need to push it above the descending trendline and then the all-time high of $73,800 to continue the uptrend.

The alternative scenario is where Bitcoin drops below the 200-day EMA at $60,000. If this happens, it will increase the chances of a drop to the lower side of the wedge at $52,000.