- Bitcoin’s foreign exchange reserve gradually declined in February.
- The number of whale entities has increased by almost 4% in the past month.
Almost 50,000 Bitcoins [BTC] were withdrawn from centralized exchanges in February, causing a sharp drop in the world’s supply ‘available to buy’.
As analyzed by AMBCrypto using CryptoQuant data, Bitcoin’s exchange rate reserve gradually declined over the month, even as the market price spiked. 44% at the same time.
Source: CryptoQuant
Why this is a bullish signal
Typically, a decrease in exchange supply implies reduced selling pressure and possible shift to other activities, such as becoming long-term holders.
Furthermore, as more Bitcoins were collected and stored in self-custodial and cold wallets, a scarcity emerged in the market. Given the dynamics between supply and demand, this was an important bullish signal.
The number of Bitcoin whales is increasing
Another important reflection of the broader hoarding mentality was the sharp increase in the number of institutional investors, also known as whales of the crypto market.
The number of unique entities holding at least 1,000 Bitcoins increased by 55 in February. This represented a jump of almost 4% from the previous month.
Source: Glassnode
The launch of several Exchange Traded Funds (ETFs) linked to the spot price of Bitcoin opened the gates of the crypto market to TradFi investors in the US.
The groundbreaking event led to optimistic predictions, with one study showing that Bitcoin would grow to $100,000 by the end of the year, and almost $200,000 by the end of 2025.
It was likely that whale investors were motivated to stock up on Bitcoins by these optimistic predictions.
Where is BTC going?
This past week, Bitcoin rose to $64,000. This raised hopes of an inevitable recovery to all-time highs (ATH). Profit taking took the king coin to $61.8k at the time of writing.
Read Bitcoin’s [BTC] Price forecast 2024-25
However, the asset was still up about 20% on a weekly basis CoinMarketCap.
According to the latest reading of Bitcoin’s Fear and Greed Index, the market was in a state of “extreme greed.” This indicated a fair amount of FOMO among market participants, which would lead to upside in the coming days.
Source: Bitcoin Fear and Greed Index