Bitcoin Exchange Reserves Drop 25% as Investors Hold Long-Term

Bitcoin's exchange reserves have been declining since early 2023, dropping from around 3.2 million BTC to 2.4 million BTC, a level not seen in years. This significant outflow indicates that investors are moving their Bitcoin from exchanges to private wallets, a behavior typically associated with long-term holding strategies. Historically, such outflows have preceded major bull runs, as fewer coins on exchanges mean less supply available for selling.

Despite the price of Bitcoin climbing from $16,000 in early 2023 to its current level of $84,000, the reserves show no signs of reversing. This sustained decline in exchange reserves suggests a growing confidence among holders, who are opting to hold their Bitcoin rather than trade it. The combination of falling supply and increasing demand has led some analysts to believe that Bitcoin could be targeting a breakout above $90,000.

Glassnode's latest report provides additional insights into market health by examining holder behavior. Short-term holders (STHs), who bought Bitcoin within the last 155 days, are currently experiencing significant unrealized losses. The "Unrealized Loss per Percent Drawdown" has surged to levels typically seen at the onset of bear markets. However, long-term holders (LTHs) have not yet shown signs of capitulation, which is a crucial indicator of market health.

Historically, substantial expansions in unrealized losses among LTHs have often marked the confirmation of bear market conditions. The absence of such losses among LTHs suggests that a full-blown bear market has not yet been confirmed. This resilience among LTHs is a key factor in delaying the bear market, as it indicates that long-term investors remain confident in Bitcoin's future.

The technical charts also provide bullish signals. The Moving Average Convergence Divergence (MACD) has just flipped bullish, with the blue MACD line crossing above the signal line. This momentum shift favors the bulls and could fuel an upward breakout. Currently trading at $84,600, Bitcoin has rebounded from its recent low of $74,400. Key targets include the 0.786 Fibonacci level at $85,726 and the 1.0 Fibonacci level at $88,804. Further targets are set at the 1.618 Fibonacci level at $97,693, the 2.618 Fibonacci level at $112,078, the 3.618 Fibonacci level at $126,462, and the 4.236 Fibonacci level at $135,551.

A daily close above $88,800 could confirm the next leg up toward $97,000 and eventually six figures if momentum continues. However, failure to reclaim $85,700 decisively could result in more sideways action or even a retest of the $81,000–$78,000 zone. The stability of LTHs and the bullish technical indicators suggest that Bitcoin's bear market has been delayed, and the market remains resilient despite short-term losses among STHs.