Bitcoin’s Key On-Chain Supply Metric Plummets: Is a Price Spike Looming?

Bitcoin’s scarcity is becoming increasingly pronounced in the market as both small and large-scale investors continue to accumulate a significant portion of the available coins. This trend could potentially boost the value of BTC in light of recent upward price momentum, hinting at a potential extension of the uptrend.

A notable development in Bitcoin’s key on-chain supply metric has been reported by Kyle Doops, a technical analyst and host of the Crypto Banter show. Specifically, the Long/Short-Term Holder Supply Ratio has experienced a significant decline, sparking speculation within the community about BTC’s future price trajectory. This decline in the crucial metric typically indicates that short-term holders are gaining dominance over long-term holders, suggesting a decrease in confidence among the latter group of investors.

According to Kyle Doops, the Long/Short-Term Holder Supply Ratio has plummeted to around 3.6, marking its lowest level in the current market cycle. This sharp drop to a new cycle low underscores a shift in Bitcoin’s market dynamics. Furthermore, Kyle Doops noted that fewer participants are holding onto their investments for the long term, with sell-offs gradually increasing. This shift in sentiment could potentially lead to a significant market event as the balance between short-term and long-term holders continues to evolve.

In addition to the Long/Short-Term Holder Supply Ratio, other key metrics such as Bitcoin’s Taker Buy/Sell Ratio are displaying a positive trend, indicating renewed buying interest among traders and investors. Kyle Doops highlighted that on Binance, a metric tracking the balance between aggressive buy and sell orders, shows a resurgence in buying activity, with takers aggressively grabbing buy orders. This shift in sentiment suggests that demand for BTC is outpacing sell pressure, potentially setting the stage for a bullish run.

As Bitcoin approaches key price levels, the rising demand raises expectations of a potential price breakout. Traders are closely monitoring how this trend may impact Bitcoin’s price direction in the coming weeks. Despite fluctuations in BTC’s price, CryptoQuant, a leading on-chain data platform, reports that the cryptocurrency is currently in the bull market zone, where an upward trend prevails.

For Bitcoin to transition to the peak period, the short-term 30-day Bull-Bear Market Cycle Indicator moving average must surpass the long-term 365-day Bull-Bear Market Cycle Indicator moving average. This crossover could signal a stronger bullish trend and increase the likelihood of a price surge. However, as prices approach the red zone, the platform warns of a potential correction. Overall, the outlook for Bitcoin remains favorable as long as the indicator stays above the 365-day moving average, but caution is advised as the market dynamics continue to evolve.