Bitcoin Price Breakout Imminent: Hot Supply Plummets Amid Supply Squeeze Fears

Bitcoin's Hot Supply Drops, Hinting at Price Breakout

Bitcoin (BTC) is showing signs of an imminent price breakout as key market indicators signal a potential supply squeeze. The cryptocurrency's "hot supply" has dropped by over 50% in the past three months, falling from 5.9% to 2.8%. This metric, which tracks BTC moved or transacted within the last seven days, suggests that fewer coins are actively being traded.

Implications of the Shrinking Hot Supply

The decline in hot supply indicates that Bitcoin holders are choosing to hold onto their coins rather than sell, despite the recent price stagnation. This behavior could signal that traders are anticipating a price increase and are waiting for the market to recover. A tightening liquidity in the market may make it harder to purchase large amounts of BTC, potentially leading to a supply squeeze.

Historical Context and Market Sentiment

Historically, a drop in hot supply has been associated with accumulation by long-term holders, reducing selling pressure. This scenario is viewed as bullish for Bitcoin, as a shrinking liquid supply could lead to higher prices due to scarcity. With fewer coins available for trading, demand may outstrip supply, driving up the price.

Recent Price Action

In the last 24 hours, Bitcoin has shown positive momentum, rallying from $83,440 to a high of $87,443.27. At the time of writing, BTC is trading at $85,256.80, reflecting a 2.22% increase. Trading volume remains robust at $37.81 billion, indicating strong market activity.

Conclusion

The combination of declining hot supply and positive price action suggests that Bitcoin may be on the verge of a significant breakout. As market sentiment shifts and holders opt to wait out the current price levels, the stage is set for a potential supply squeeze that could push Bitcoin's price higher.