Bitcoin Supply Tightens as Price Surges Amid Institutional Demand and Bullish Chart Patterns

Bitcoin’s supply is tightening, which could potentially fuel a significant price surge. This tightening is driven by increasing institutional and sovereign demand, which is reducing the amount of Bitcoin available on exchanges. Market sentiment remains positive, with indications of a potential breakout on the horizon. The decline in exchange reserves signals a shift towards scarcity, reinforcing Bitcoin’s bullish outlook.

The U.S. government is reportedly creating a Bitcoin reserve, recognizing BTC as a financial asset. This move could spark a domino effect, prompting other nations to follow suit. Institutional and sovereign accumulation may further reduce BTC’s supply, intensifying its scarcity. As governments expand their holdings, Bitcoin’s position as an inflation hedge could grow stronger, potentially attracting more long-term investors.

Bitcoin’s price chart reveals a descending symmetrical triangle pattern, a formation that often signals an impending breakout. At the time of writing, BTC was facing key resistance at certain levels. If bulls reclaim these levels, Bitcoin could surge toward a higher price point, creating a bullish breakout scenario. However, failure to break out may lead to a retracement toward a lower support level. Additionally, the RSI indicated that BTC was approaching oversold conditions, which could trigger a bounce, particularly if buy-side momentum increases near current levels.

As of the latest data, a significant percentage of BTC holders were in profit, having purchased BTC below its current price. This distribution reflects strong market confidence, as most investors are holding despite recent short-term volatility. The high proportion of profitable holders suggests that long-term investors continue to dominate the market, lowering the chances of panic selling.

Daily active Bitcoin addresses have dropped in the past week, while zero-balance addresses have also fallen. However, new addresses have increased, indicating fresh market entrants. This suggests that despite the short-term decline in activity, BTC continues to attract new users. Additionally, large transactions exceeding a certain amount have surged, highlighting institutional engagement.

BTC’s liquidation data shows a stark contrast, with a significant amount in short liquidations against a higher amount in long liquidations. This indicates that many bullish traders were overleveraged, leading to forced sell-offs. Additionally, this imbalance suggests that long traders were caught in a correction, triggering liquidation cascades. However, if Bitcoin stabilizes at key support levels, liquidations could shift in favor of long positions.

In conclusion