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According to a recent crypto-fast post by contributor Carmelo Aleman, Bitcoin (BTC) is “far from a real supply shock.” Analysts listed several on-chain metrics, believing that despite the reduced exchange reserves, leading cryptocurrencies are unlikely to face real supply scarcity in the near term.
Bitcoin supply shock? Not only
Since April 21, BTC has traded between $91,500 and $95,800, with little signal about its next targeted action. While some analysts repeatedly highlight the potential supply shock, which could make Bitcoin price higher, Aleman’s analysis offers a more cautious outlook.
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According to Aleman, BTC’s centralized exchange (CEXS) has steadily declined over the past year. Specifically, reserves fell from 2,942,077 BTC on November 11 to 2,490,318 BTC on April 28, down 15.35% in just five months.
During the same period, the capitalization of Bitcoin – an indicator of the total value of BTC based on the price proposed last time for each coin – soared from $669.32 billion to $883.03 billion. This reflects an increase in real capital invested on the Bitcoin network, rather than just market speculation.
As BTC becomes more “expensive,” buying around 500,000 BTC at current prices could bring the cryptocurrency to $130,000 to $140,000, Aleman explained. However, he warned that this situation could cause huge sales pressure from miners. He added:
This behavior can offset the decline in exchange reserves because historically, miners tend to sell more as prices rise. Therefore, even if reserves continue to decline, price increases may encourage enough selling to partially offset that decline.
Analysts concluded that unless Bitcoin sees a large influx of capital, a real supply shock in this market cycle is unlikely—enough to increase the capitalization it achieves three to four times the current level.
Technology points to BTC breakthrough
Although the likelihood of supply-driven gatherings is low, leading digital assets are not losing everything. Several technical indicators point to the coming Bullish Cryptocurrency rally.
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It is worth noting that Bitcoin’s Weekly Relative Strength Index (RSI) Bankruptcy Long-standing trend line, indicating potential momentum transfer. This development could help BTC recover $100,000 in the coming weeks.
In addition, recent chain data suggest that short-term holders are avoid By selling its BTC (even in red), this could indicate an increase in investor confidence and a potential bullish reversal. At press time, BTC was trading at $94,374, down 0.4% in the past 24 hours.
Featured images created with Unsplash, charts from CryptoQuant and TradingView.com
