- Bitcoin’s supply on exchanges has reached a six-year low.
- Institutional buyers have been accumulating BTC at levels not seen since July.
- Supply has tightened, leaving bulls on edge.
October has arrived with a fresh surge of excitement for Bitcoin enthusiasts as the leading cryptocurrency sees its supply on exchanges hit a six-year low. This drop aligns with upbeat U.S. jobs data and hints of potential Federal Reserve rate cuts, fueling hopes for a robust fourth-quarter rally in the crypto market.
There’s one question on everyone’s mind: Is this the start of “Uptober”? On October 4, Bitcoin spiked to $62,338, riding the wave of a surprisingly strong September employment report. U.S. nonfarm payrolls soared to 254,000, leaving economists’ expectations of 147,000 in the dust, while unemployment slipped to 4.1%.
97% Odds of Fed Rate Cut: Will Bitcoin Soar?
Investors are now betting on a 97% chance of a 25 basis point rate cut at the Federal Reserve’s November meeting, which could create favorable conditions for risk assets, including Bitcoin. This optimism is further fueled by on-chain data showing a dramatic decline in Bitcoin held on exchanges.
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CryptoQuant reports that exchange reserves now hover at just over 2.8 million BTC, the lowest level since November 2018. The significant drop of 500,000 BTC since March suggests that liquidity is tightening—often a bullish signal for prices.
During similar periods in the past, Bitcoin has experienced sharp upward movements, most notably between March and November 2020, when it launched a rally to its then-record high of $69,000. Institutional investors appear to be seizing the opportunity, flocking to U.S.-based spot Bitcoin ETFs at levels not seen since July.
Bitcoin’s Institutional Demand Surges
After a brief selling streak in early September, institutional buyers reversed course, netting an average of 7,000 BTC daily by the month’s end. This surge in demand has lifted Bitcoin to record highs in early 2024, and it could well be a precursor to further gains.
Some analysts have cautioned that Bitcoin might first dip to around $57,000 to align with long-term trends, but the overall setup seems ripe for a rally. With dwindling supply on exchanges and renewed institutional interest, Bitcoin could be primed for another run-up as October unfolds.
On the Flipside
- While Bitcoin’s supply on exchanges has decreased, this isn’t always a clear indicator of a price rally.
- Past instances have shown mixed results for Bitcoin following rate cuts, as broader market conditions and sentiment play bigger roles in its price movement.
- Low liquidity can amplify price swings, potentially leading to extreme volatility rather than steady growth.
Why This Matters
The six-year low in Bitcoin supply on exchanges, alongside optimistic market sentiment fueled by strong U.S. jobs data and expected Fed rate cuts, signals a pivotal moment as conditions align for a potential rally. This tightening liquidity and renewed institutional demand could catalyze a broader shift, setting the stage for a possible breakout in Q4.
Although we have new sentiment in the market surrounding ‘Uptober,’ just a few days ago we were talking about ‘Rektober.’ You can read about it here:
Crypto Crash Turns Uptober Into Rektober
For insights on Bitcoin’s potential pump and what job growth could mean for the Fed’s November decision, read here:
Bitcoin Eyes Pump—Job Growth Hints at November Fed Cut