Key Points
- Bitcoin’s price volatility has increased, struggling to maintain the critical $60,000 range.
- Bitcoin exchange reserves have declined, indicating that major holders are increasingly unwilling to sell.
Despite the recent increase in Bitcoin’s [BTC] price volatility, the cryptocurrency remains below $60,000 at the time of writing.
Decline in Bitcoin Exchange Reserves
Interestingly, amidst these price fluctuations, Bitcoin exchange reserves have been on a downward trend. This suggests that the so-called “whales” or major holders of Bitcoin are showing a reluctance to sell their holdings.
According to data from CryptoQuant, Bitcoin exchange reserves have fallen to approximately 2.6 million BTC, down from over 3 million BTC reserves recorded in January. This decline in reserves indicates a decrease in the liquidity available on exchanges.
This could be a positive sign for Bitcoin’s price as it suggests that fewer holders are looking to sell their BTC, thus reducing the selling pressure on the market. The ongoing decline in exchange reserves is likely driven by long-term holders (HODLers), reflecting a strong belief in Bitcoin’s future value and a reluctance to engage in short-term trading.
Increased CDD and Reduced Exchange Reserves
An analysis of Bitcoin’s Coin Day Destroyed (CDD) metric alongside Bitcoin exchange reserves has shown an interesting divergence. The CDD metric, which tracks the movement of older Bitcoins that have accumulated “coin days” while remaining unspent, has experienced a slight spike recently. This contrasts with the previously stable trend that indicated long-term holders (LTHs) were not actively spending their coins.
The recent increase in CDD suggests that the current volatility in Bitcoin’s price may have triggered some long-term holders to move or sell their coins, breaking the previous trend of holding. This shift could be a response to market uncertainty or a strategic decision by some holders to capitalize on price movements.
Bitcoin’s Volatility Continues
Bitcoin’s daily price trend shows that the cryptocurrency rose to approximately $61,000 in the previous trading session but could not sustain this level and eventually closed the session at around $59,264. This pattern of briefly reaching higher prices before retreating has been a consistent trend for Bitcoin over the last few days, contributing to increased market volatility.
The extent of this volatility is further illustrated by the behavior of Bitcoin’s Bollinger Bands, a technical indicator that measures price volatility. The “elasticity” of the Bollinger Bands refers to their widening in response to increased price fluctuations. When the bands stretch wider, it signifies higher volatility as the price moves more dramatically in either direction.
As of this writing, Bitcoin is trading at around $59,597, with a slight increase of less than 1%. The ongoing volatility, as shown by the Bollinger Bands, suggests that Bitcoin is experiencing significant short-term price swings.
