Bitcoin Supply Drops 21% in Four Months Amid Halving Cycle

Bitcoin’s exchange supply has seen a significant decrease, dropping by 21% over the past four months. This reduction in available supply aligns with the ongoing halving cycle, which has historically been a catalyst for sharp upward price movements.

According to analysis from XForceGlobal, Bitcoin has entered a technical zone known as the “orange box.” This zone has been historically followed by parabolic rallies, suggesting that the current upward trajectory could continue. Despite being late in the bull market phase, analysts believe that the broader macro trend is still in its early stages.

The current cycle has not yet displayed the steep upward slope seen in past halving cycles, leaving the halving-cycle fractal incomplete. XForceGlobal warns that shorter-term fluctuations should not distract from the long-term trajectory. If Bitcoin continues to follow historical halving patterns, a sharper rally could still occur.

Santiment reports that Bitcoin reached a new all-time high of $113,923, posting a 13.6% gain from its June 22 local bottom. Despite this rally, the exchange supply continues to shrink. In the past four months alone, 315,830 BTC, roughly 21% of the available exchange supply, has been moved off platforms. This long-term trend dates back to July 2020, with 1.88 million BTC (a 61% decrease) shifting into self-custody. The drop in exchange-held BTC indicates growing confidence among long-term investors.

Analysts note that with fewer coins available for immediate sale, the chance of sharp corrections decreases, supporting a continued bullish bias. Bitcoin is now trading at $117,695, with a daily gain of 1.43%. The move is supported by strong volume, totaling 1.31K BTC, suggesting strong buying interest. The Relative Strength Index (RSI) stands at 73.20, signaling overbought conditions but also confirming ongoing bullish momentum.

Bitcoin is currently testing resistance at $117,750. If it breaks above this level, the next target is $120,005. On the downside, key support lies at $111,789, a level tested in May. Analysts suggest that holding above $117,000 could trigger a new leg higher, while a drop below $111,789 might prompt a short-term reversal.