Recent developments in the Bitcoin market have piqued the interest of investors and analysts alike. With a significant decline in Bitcoin supply on exchanges to an 8-year low, the question arises as to whether this could be a harbinger of a new high for the BTC price.
Recent analysis by Santiment, a leading blockchain analytics firm, shows that the Bitcoin supply on exchanges has fallen to 7.53%, its lowest level since 2018. This development suggests that more investors are moving their Bitcoin into self-custody, reducing the available supply for immediate sale. This shift is often interpreted as a bullish signal, as it indicates less selling pressure and increasing confidence among holders.
A key driver of Bitcoin’s price movements has been institutional demand. Since March 14, Bitcoin ETFs have seen continuous inflows, leading to a more than 10% increase in the BTC price. In contrast, ETF inflows were negative to nearly flat between February 10 and March 13, resulting in a 17% decline. These patterns highlight the strong connection between institutional buying behavior and Bitcoin price movements, with large investors having greater market influence than private speculators.
In parallel with growing institutional demand, an article on OKX‘s research page shows that Bitcoin’s market behavior is also changing. Historically, a 50% drop was considered a bear market. Previous cycles saw declines of up to 80%. However, as Bitcoin has matured, extreme crashes caused by panic selling have become less common. Today, a 30% drop is often enough to trigger bear market concerns. According to the article’s findings, Bitcoin could be going through a brief “mini” bear market instead of the prolonged declines of past cycles.
An early indicator of this change was the market value to realized value ratio among short-term holders, which compares Bitcoin’s current price to the average purchase price of short-term holders. This metric already indicated bearish sentiment before the notable price declines on February 25. Now, it has fallen below the 365-day moving average, a critical level that typically indicates increased selling pressure. However, analysts expect the metric to improve and lead to a recovery rally as Bitcoin supply on exchanges decreases.
At the time of publication, Bitcoin is trading at $87,653, about 19% below its peak of $108,786. These developments raise the question of whether Bitcoin could reach a new high in the near future, especially if institutional demand continues to increase and supply on exchanges continues to decline.
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