$120k Bitcoin Soon? Exchange Reserves Dry Up Amid Increased Demand
Mustafa Mulla19 Dec 20242 min read
Bitcoin’s recent surge to its ATH $108k has caught the attention of investors, especially after U.S. President-elect Donald Trump suggested the creation of a national Bitcoin reserve. A major factor driving this surge is the historic drop in exchange reserves, which are now at a record low of 2.4 million BTC. With high demand and limited supply, Bitcoin could soon reach $120K.
Bitcoin Exchange Reserve Hit Record Low
According to Kripto Baykus, a CryptoQuant analyst, Bitcoin’s exchange reserves have been steadily falling throughout 2024, dropping from 3 million in January to a record low of 2.4 million by the end of the year.
This decline signals a change in how investors are approaching Bitcoin, especially among institutional investors. Many of these investors are adopting the “hodl” strategy, removing their Bitcoin from exchanges in favor of long-term holding.
Baykus notes that this is a sign of confidence in Bitcoin’s future, with institutional players betting on the cryptocurrency’s potential.
Potential Risks Ahead
While the supply-side trends are bullish, there are some concerns about Bitcoin’s demand. Yonsei Dent, another CryptoQuant analyst, pointed out a divergence in the Coinbase Premium Index, a metric used to track demand in North America.
Despite Bitcoin’s price surge, Coinpedia news reported that the Coinbase Premium Index has dropped. This suggests that the recent price surge may not be entirely driven by U.S. demand, raising concerns about the sustainability of Bitcoin’s rally in the medium term.
Could $120K Be Next?
As these reserves shrink and Bitcoin becomes scarcer, its price has been rising. At the start of 2024, Bitcoin was valued at around $40,000. By November, it had soared past $100,000, even hitting a new high above $108,000.
With Bitcoin’s supply tightening and demand staying strong, experts believe that Bitcoin could continue to set new price records through the rest of 2024 and into 2025. If the current trends continue, Bitcoin could reach new highs, possibly even hitting $120,000.
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FAQs
- Bitcoin exchange reserves refer to the total BTC held on trading platforms, now at 2.4 million due to growing hodling by institutional investors.
