Bitcoin exchange activity has dropped sharply since July 2022 – accumulation or indifference?
Bitcoin once again surpassed its all-time peak, surpassing the $110,000 mark just a few hours ago. As BTC enters the fresh price discovery phase, the breakout indicates a strong bullish momentum. Investor sentiment remains optimistic, with many analysts speculating on how far the rally can be extended. While some foresee extended bull runs by macro trends and institutional flows, others warn that overheating levels could trigger a sharp pullback.
A piece of key data that attracts attention comes from crypto literacy: The average weekly volume of BTC/USD pairs has dropped sharply on centralized exchanges (CEXS) since the Luna crash in 2022. From July 2022, the highest peak of BTC transactions per week was 426,000 BTC as of yesterday’s meeting deadline.
This decline in exchange activities presents two key dynamics. First, the reduction in supply of BTC on exchange is often associated with long-term persistence behavior (usually a bullish signal). Second, lower seller liquidity may increase volatility, especially in the face of rapid price movements. As Bitcoin continues to march upward, the lack of a large amount of CEXs in CEXs may accelerate or amplify corrections based on investor reactions in the coming days.
Bitcoin low exchange volume adds fuel to bullish outlook
Faced with macroeconomic headwinds, Bitcoin showed flexibility. Yesterday, U.S. stocks fell due to rising yields on Treasury bills, but Bitcoin has risen steadily, suggesting that market players may be spinning capital into hard assets due to uncertainty. This relative power emphasizes the attractiveness of BTC as a hedge, especially when traditional markets are shaking.
However, despite bullish momentum, the key barrier remains at the $115,000 level. Beyond this resistance will confirm the next phase of the rally and open the door to higher price discoveries. Instead, failing to make the current level less than $110,000 may promptly correct the previous support zone. Traders are paying close attention as volatility may rise rapidly.
Top analyst Axel Adler adds a meaningful environment to the broader trend. According to Adler, CEXS’s BTC/USD pair trade volume plummeted after Luna’s closure in 2022 – from 2.9 million BTC in July 2022 to just 426,000 BTC this week.
The long-term decline in exchange activity is seen as a bullish structural shift. It marks a step towards a long-term sustained behavior and tightening of available supplies. As the exchange cycles reduce coins, seller pressure reduces, creating a backdrop of support for continuing upward price action.
BTC price action shows strong momentum
After briefly reaching $111,163, Bitcoin is trading at $110,855, indicating a continuation of upward momentum and bullish trend. On the 4-hour chart, BTC has been at higher lows and higher highs since the $100,000 support level bounced on May 15. The recent breakout above the $108K resistance level has triggered a surge in purchases, pushing BTC into unknown territory.
Key technical indicators support bullish bias. The 200-period simple moving average (SMA) is $98,024, while the 200-period index’s moving average (EMA) is $98,826, is on an upward trend, confirming strong potential trend support. In the past two sessions, the volume peak also demonstrates the firm belief of buyers as BTC enters price discovery.
However, the price is starting to show signs of potential fatigue. The latest candles show long wicks on the upper side, suggesting sales pressure near local highs. If BTC fails to maintain power, the 108K packet may be retested. Instant support is approximately $103,600, as a psychological place for $103,00K.
Featured images from DALL-E, charts from TradingView
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