Bitcoin has been holding steady above the $60,000 mark for the past two weeks, showcasing resilience as the broader cryptocurrency market experiences growth. This consistent performance has sparked optimism among traders and investors.
Recent data from CryptoQuant reveals that short-term holders are capitalizing on profits, leading to a significant decrease in Bitcoin’s supply. This dwindling availability of BTC hints at a potential supply squeeze, especially as demand continues to surge following recent interest rate cuts by the Federal Reserve.
Bitcoin Supply Suggests A Coming Rally
Bitcoin’s recent price movement has generated both excitement and caution among market participants. While some view this as the beginning of a new rally, others are wary of a potential bull trap that could lead to a sharp correction. Prominent on-chain analyst Axel Adler has provided valuable insights into this debate through a detailed report on X.
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Adler’s analysis indicates that short-term holders (STHs) have moved into profit and are starting to sell their coins. Despite this selling activity, the STH supply has decreased by 1.31 million BTC, suggesting a more positive outlook.
Fewer Bitcoins are now circulating among short-term holders, who are typically associated with frequent trading. This drop in supply, coupled with an increased tendency among holders to HODL, signals growing confidence in Bitcoin’s long-term potential. According to Adler’s chart, the current STH supply stands at 3.94 million BTC, significantly lower than the 5.25 million BTC reported in April.
This reduction in supply indicates that fewer short-term traders are entering the market, potentially strengthening Bitcoin’s price. Investors are increasingly optimistic that this supply decrease will drive higher prices in the coming weeks, reinforcing the belief that Bitcoin could be on the verge of a new rally.
BTC Technical Analysis: Key Levels To Watch
Currently trading at $63,617 after a 4% dip, Bitcoin is testing the daily 200 moving average (MA) at $63,719 as support. This level is critical for BTC, as the price has struggled to maintain a position above this indicator since early August. Holding this level is crucial for bulls to sustain upward momentum and prevent further downside risks.
If Bitcoin manages to stay above the daily 200 MA, it could signal renewed strength, potentially allowing the cryptocurrency to reclaim the $65,000 area. This would likely pave the way for a stronger push toward higher price levels and potentially trigger a new bullish phase.
However, if Bitcoin fails to hold above this key support, a deeper correction could ensue. A failure to close above the daily 200 MA could lead to a pullback to lower demand levels around $60,500, a critical support zone in previous corrections. Traders and investors are closely monitoring this level, as the next few days will be crucial for Bitcoin’s short-term price action.
