Bitcoin's Exchange Supply Drops 3.9% as Price Surpasses $100,000

Bitcoin’s (BTC) exchange supply, a metric indicating the amount of the cryptocurrency available for trading, has been steadily declining over the past month. This trend has accelerated since BTC surpassed the $100,000 mark on May 9. On May 13, approximately 2.46 million BTC were held on exchanges, down from 2.56 million on April 14, marking a 3.9% decrease in exchange supply over the course of a month.

When cryptocurrencies are withdrawn from exchanges, they are typically moved to private wallets intended for long-term storage. This action not only reflects a long-term bullish sentiment but also reduces selling pressure in the market. The shrinking exchange supply, coupled with other bullish indicators, suggests that the current dip in BTC prices is likely temporary.

Despite Bitcoin’s impressive short-term performance, the rally has slowed down. At the time of reporting, BTC was trading at around $103,260, with weekly returns at 6.51%. However, in the last 24 hours, the cryptocurrency showed a modest gain of 0.10%, following a 1.5% drop from its daily high of $104,840. While there is a possibility that BTC could test support at $100,000, the overall recovery of the crypto market and positive movements in equities make a significant drop below this level unlikely.

Several bullish factors are currently at play. The surge above $100,000 led to a three-month high in open interest, a measure of derivatives positions. Additionally, approximately $20 million in short positions were liquidated between May 13 and May 14, indicating a shift in speculative trading towards a bullish outlook.