Bitcoin Exchange Reserves Hit Multi-Year Lows – Is a Supply Squeeze Fueling the Next Rally?
Exchanges are bleeding Bitcoin—again. On-chain data shows reserves plunging to levels not seen since the 2020 bull run, with whales and retail hodlers alike hoarding coins off-platform. Cue the liquidity crisis whispers.
Fewer coins up for grabs means one thing: any surge in demand could send prices parabolic. Remember 2021’s ‘few understand’ memes? Buckle up.
Wall Street analysts (the same ones who called Bitcoin ‘rat poison’ at $6,000) are now quietly repositioning. Funny how a trillion-dollar asset class makes skeptics suddenly fluent in ‘HODL.’
Bitcoin On-Chain Data Signals Strength
Bitcoin is currently consolidating above critical liquidity levels, trading just below the $100,000 mark after a multi-week surge that began with a decisive break above $90,000. The bulls are in short-term control, but they now face the challenge of sustaining momentum. Holding above this range is essential to confirm a new leg of the rally and prevent a deeper pullback. Despite strong gains, the market remains fragile, shaped by global uncertainty and persistent trade tensions, particularly between the US and China.
After months of heavy selling pressure from all-time highs, Bitcoin is showing renewed strength and attempting to establish a broader bullish structure. The recent price action signals that investors are beginning to rotate back into risk assets. Yet, macroeconomic instability and potential recession risks still loom large, suggesting that price action could remain volatile.
Daan shared on-chain data that supports the bullish thesis. Bitcoin exchange reserves continue to decline rapidly, a trend that has accelerated since the last US election and during the recent price consolidation. This drop in exchange balances historically precedes supply crunches, which can fuel aggressive rallies. Should central banks reintroduce large-scale liquidity injections, Bitcoin would likely respond with a powerful breakout. For now, bulls must hold the line.
BTC Price Action Details: Key Levels To Watch
Bitcoin (BTC) is currently trading around $96,600 after a strong multi-week rally that began NEAR the $84,000 level. The 4-hour chart shows a clear bullish structure, with higher highs and higher lows forming since mid-April. Price action remains firmly above both the 200-period Simple Moving Average (SMA) and the 200-period Exponential Moving Average (EMA), which sit at $86,925 and $89,428, respectively. This suggests strong support and continued momentum on the short-term trend.
However, BTC has now entered a tight consolidation range just below the psychological $100,000 resistance level, with short-term resistance forming near $97,900. Volume is showing some decline on recent candles, hinting at potential buyer exhaustion or a pause before the next leg. If bulls can break through $98,000 with volume confirmation, a clean sweep above $100K is highly likely, targeting the $103,600 zone as the next major resistance.
On the downside, any drop below $95,000 could invalidate short-term bullish momentum and trigger a retracement back toward the $90,000-$91,000 range—an area of high liquidity and previous consolidation. Overall, BTC remains technically strong, but the next decisive move will come from how it handles the $97K–$100K range in the coming sessions.
Featured image from Dall-E, chart from TradingView
