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Bitcoin’s Hot Supply Drops 50% in 3 Months – Bullish or Bearish Signal?

The cryptocurrency market is still bleeding, but there may be signs that bitcoin (BTC) could likely be recovering soon. One of them is the asset’s hot supply, which refers to the amount of BTC that is available for trading.

According to a tweet from the on-chain intelligence platform Glassnode, Bitcoin’s Hot Supply, a metric that tracks BTC aged ≤1 week, has recorded a 50% decline in three months. This plunge has caused coins aged a week or less to contract from 5.9% of Bitcoin’s circulating supply to 2.8%.

Bitcoin’s Hot Supply Has Dropped

A decline in Bitcoin’s hot supply could be a bullish or bearish sign. In a bullish scenario, fewer BTC being actively traded or moved could mean many things, including increased holding behavior, market stability, or potential supply shock.

In the case of increasing holding behavior, investors could be opting to hold onto their assets rather than engage in short-term trading, especially with the crypto market currently in an unfavorable condition. When investors opt to hold more, it often reflects bullish sentiment because they are anticipating future price rallies.

A decline in hot supply often contributes to reduced volatility because the market tends to witness fewer sudden price swings as fewer bitcoins are traded. This leads to a more stable market, giving room for price recoveries and possibly rallies in the medium term.

In addition, as the number of BTC in active circulation decreases, the available supply of the original cryptocurrency for trading reduces. Under stable or high-demand conditions, the low hot supply can trigger a supply shock, often applying positive pressure on Bitcoin’s price. It is worth noting that demand needs to be high for a supply shock to happen; unfortunately, that is not the case currently.

Bullish or Bearish?

Glassnode revealed that the Bitcoin market is seeing weaker demand than three to four months ago. This is seen in the number of BTC flowing into exchanges. Bitcoin inflows have fallen 54% from 58,600 BTC per day to 26,900 BTC.

The market analytics firm said this plunge in exchange inflow also aligns with declining investor sentiment and capital flows. Spot Bitcoin exchange-traded funds (ETFs) have seen some of their highest daily outflows in recent weeks, reflecting a huge lack of demand.

However, these ETFs have recorded three days of inflows this week, indicating that demand may be recovering. So, the plunge in Bitcoin’s hot supply may turn out to be a bullish signal after all.

ポスト Bitcoin’s Hot Supply Drops 50% in 3 Months – Bullish or Bearish Signal? に初登場した。 クリプトポテト.


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