Bitcoin Leaves Exchanges As Retail Demand Rises Despite Profit-Taking

Bitcoin broke the massive psychological barrier of $100,000 for the first time this week, marking a historic milestone. However, its journey past the milestone was short-lived as the cryptocurrency saw a drop below $92,000.

The recovery was swift, with Bitcoin currently trading near $98,000. Data from CryptoQuant suggests that the recovery is underpinned by declining supply of BTC on exchanges and sustained demand, indicating that the current uptrend could be sustainable.

Bitcoin withdrawal from exchanges

According to CryptoQuant’s latest analysis, there is a significant trend in net Bitcoin exchange flows, indicating potential bullish momentum in the market. Negative flows, which indicate that more Bitcoin is leaving exchanges than entering, have intensified since late October, suggesting that whales are transferring their holdings to long-term storage.

This move reduces the supply of Bitcoin on exchanges, relieves selling pressure and creates conditions for price appreciation. The trend aligns with Bitcoin’s recent surge past $100,000, supported by the exchange’s declining supply and sustained demand.

However, CryptoQuant cautions that as prices approach higher levels, profit-taking could introduce short-term volatility. For long-term investors, reduced supply combined with steady demand strengthens the case for further gains.

Bitcoin retail demand

There has also been an increase in demand from retail Bitcoin investors, with the 30-day change in demand reaching its highest level since 2020. CryptoQuant said this increase in retail interest has increased demand of the ongoing market, even as some long-term holders begin to take profits. .

Historically, increased retail participation has often indicated local peak potential, but it also reflects a growing commitment to the market. Bitcoin’s sideways trading phase suggested that retail demand could gradually wane, although a move above the $100,000 level is now expected to re-ignite enthusiasm and potentially fuel a euphoric market phase.

“Monitoring the interplay between retail and institutional activity during this phase will be crucial, as strong retail participation often signals greater market optimism, while institutional interest provides the basis for sustained momentum” .

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