Bitcoin price extends recovery, eyeing return to $45,000
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●Bitcoin supply on exchanges has been on a consistent decline since the ETF approvals, driving an increase in stablecoin supply.
●Higher stablecoin supply signals an increase in buying power, supporting the thesis that the bull cycle still has legs.
●The upcoming BTC halving in April is likely to catalyze Bitcoin price gains.
Bitcoin (BTC) price recovers above $43,000 on Tuesday after its recent correction, which led to a fall from a two-year high of $48,969 to a low of $38,555.
Analysts at crypto intelligence tracker Santiment said that Bitcoin’s bull cycle, which started in October, is likely to continue as Bitcoin supply on exchanges has been in a downward trend since August. Dwindling exchange reserves are considered typical of a decline in selling pressure, which supports the thesis of a price recovery.
Daily digest market movers: Declining exchange supply could support price recovery
●Bitcoin supply on exchanges has observed a drop from 6.05% in August to 5.40% on January 30. Typically, a decline in supply reduces the selling pressure on the asset because it means more traders choose to keep their BTC in their wallets rather than in exchanges.
Bitcoin supply on exchanges. Source: Santiment
●BTC has consistently left exchange wallets since the Spot ETF approvals by the US Securities and Exchange Commission on January 10.
●Analysts at crypto intelligence tracker Santiment note that Bitcoin’s exchange supply is in a downtrend. This has happened alongside an increase in stablecoin supply overn the past five weeks.
●An increase in USDT reserves on exchanges is considered indicative of rising buying power, suggesting that it is likely that the mid-term bull cycle that started in October still has legs, the analysts said.
●BTC halving event, which in the past has become a catalyst for price increases, is expected to occur on April 18.
Tether supply on exchanges climbs, BTC supply drops. Source: Santiment
●The BTC outflow from Grayscale’s ETF was considered one of the key factors that ushered the recent decline in Bitcoin price. However, Fidelity’s Spot Bitcoin ETF raked in $208 million in daily inflows on Monday alone, based on data from Farside investors. This outstripped GBTC outflows for the first time since its launch day, flipping the narrative that this factor was likely influencing the BTC price decline.
Technical Analysis: Bitcoin price eyes return to $45,000
Bitcoin price is currently in an uptrend that started in September. BTC climbed to its two-year high of $48,969 on January 11, before correcting to a low of $38,555. BTC price made a comeback above the $43,000 level on Tuesday, trading at $43,374 at the time of writing.
Looking up, BTC faces resistance at the bearish imbalance zone that expands between $43,870 and $45,562.
BTC/USDT 1-day chart, Source: TradingView.
In the event of a decline, Bitcoin price could plummet to support at the psychological level of $40,000. If this threshold is broken,the next support zone is between $38,535 and $38,574.
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