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Bitcoin’s Bullish Momentum: Approaching Record Highs
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After experiencing a significant decline in August, Bitcoin is on a bullish trajectory once again, challenging its previous all-time high. The premier cryptocurrency has surpassed the $115,000 mark, maintaining its upward momentum. This resurgence appears to have spurred increased adoption among investors, subsequently elevating Bitcoin’s Scarcity Index.
Significant Rise in Binance’s Bitcoin Scarcity Index
As Bitcoin regains its upward momentum, several key metrics are trending positively. The dynamics of Bitcoin’s supply on exchanges are shifting, highlighted by a notable increase in the Bitcoin Scarcity Index on Binance, the leading cryptocurrency exchange.
According to a quick analysis on the CryptoQuant platform by market expert Arab Chain, a sudden spike in this critical metric was observed on Sunday, marking the first such occurrence since June. This spike indicates a tightening of supply, suggesting that with increased investor accumulation, fewer coins are available for trading. This phenomenon implies either a substantial withdrawal of BTC from Binance or a reduction in sell orders, thereby limiting the supply on the platform. Such shifts are often associated with the entry of large investors, such as institutional buyers or whales, making significant acquisitions.
Interestingly, when the immediate buying power surpasses the available supply, the Bitcoin Scarcity Index increases, indicating heightened competition among buyers for BTC in the market. Notably, the last occurrence of this pattern in June led to a sustained period of growth, propelling BTC to an all-time high near $124,000.
During such surges, BTC typically attracts substantial fund inflows, often accompanied by positive news or unexpected capital injections. A sustained positive index over several days could herald the beginning of a strong accumulation phase, potentially supporting the continuation of the uptrend.
However, if a rapid surge is followed by an equally swift decline, it may indicate speculative activity or order liquidations, often succeeded by a period of stability or a price correction. Observing the scarcity chart, Arab Chain points out that such a scenario seems applicable to BTC now.
Escalation of the Metric to Historic Highs
In recent months, the expert observed a sharp rise in the scarcity index, reaching unprecedented highs of over +6 before quickly reverting to neutral or even negative levels. This sudden fluctuation raises questions about the potential impact on the next market phase.
Arab Chain noted that the discrepancy between the high price and the index’s rapid return to zero or below indicates a potential weakening of strong buying momentum. Nonetheless, this trend is predominantly confirmed if the supply is increasing or if withdrawals from crypto exchanges are decelerating, factors likely to influence BTC’s price trajectory.
With BTC trading at $115,894 on the daily chart, the market remains attentive to these developments.
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