Current Bitcoin Holder Actions Mirror December 2020, Suggesting Possible Growth Phase: Bitfinex Analysts

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By Harper Lee

According to this week’s Bitfinex Alpha, a significant decrease in the idle supply of Bitcoin that has not moved in over a year indicates that long-term holders continue to reduce their holdings or withdraw their assets from the exchange . report.

“This week’s halving is fundamental to Bitcoin’s price momentum. As it approaches, it has seen a notable increase in Bitcoin leaving centralized exchanges and a decrease in the idle supply of Bitcoin which is not has not moved in over a year, at 18 months low,” Bitfinex analysts said.

The report adds that current actions by Bitcoin holders reflect those seen in December 2020, just before a significant rise in the Bitcoin market. “This trend suggests that we may be entering a similar growth phase,” the analysts added.

Bitcoin exchange reserves at their lowest in several years

The reduction in long-term holder supply on exchanges observed by Bitfinex matches data from CryptoQuant. Charts show that Bitcoin exchange reserves have reached their lowest levels ever recorded by CryptoQuant data, which dates back to early 2021.

In July 2021, bitcoin exchange reserves hovered around 2.8 million, but have now fallen to around 1.94 million, indicating a decrease of around 862,000 bitcoins since CryptoQuant began recording this measurement.

Bitcoin BTC

foreign exchange reserves fell to their lowest level on CryptoQuant charts. Image: CryptoQuant.

The market is interested in the halving

After Monday’s sell-off, the impending halving has put the bitcoin market at a crossroads. The Bitfinex report states that after the big sell-off of the last two days, which sent prices falling sharply, there are now indicators, including the stabilization of funding rates, which suggest that traders’ attention has returned to the reduction half to come.

Some caution is needed now, as the halving event contains forward-looking pricing from markets, which could now pull back, according to Swarm Markets co-founder Timo Lehes.

“There is still potential for price discovery, especially with the addition of geopolitical volatility that has caused prices to fall unexpectedly in the short term,” Lehes said in an email to The Block.

The Next Bitcoin Halving Event

Every four years, a mechanism coded into the Bitcoin blockchain halves the block reward miners earn. This time, that means that each new bitcoin block mined every ten minutes or so will yield 3,125 BTC.down from current 6.25 BTC block the reward.

According to The Block’s Bitcoin Halving Countdown page, based on current estimates, the halving will take place on April 20, 2024 at 03:48 UK time, once the network reaches a block height of 840,000 .

Historically, many of Bitcoin’s gains have occurred 12 to 18 months after a halving, when declining supply was accompanied by increasing demand. For example, at the time of the halving in 2020, one bitcoin cost less than $10,000. By the 2022 peak, prices had climbed to over $67,000.

Although this is the first time a halving has occurred following the arrival of spot Bitcoin ETFs and a strong wave of inflows.

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© 2023 The Block. All rights reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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