Bitcoin[1] was trading at $18,626 with a market capitalization of $345 billion, at the time of writing, with the world’s largest cryptocurrency on the precipice of finally overtaking its ATH on the price charts. It is in light of such developments and expectations that it is interesting to note that Bitcoin[2] is still leaving exchanges.
Here, the narrative driving up prices is the “supply shortage narrative,” with the total circulating supply of Bitcoin[3] to exchanges currently just over 18.5 million.
Total Circulating Bitcoin || Source: Blockchain.com[4]
What is even more interesting here is that with nearly 2.5 million Bitcoin left to mine, Bitcoin[5] being pulled out of exchanges is exceeding Bitcoin being mined per quarter. This is supporting the supply shortage narrative on spot exchanges. The number of active Bitcoin addresses in the past quarter has increased considerably, however, increasing demand is being met by scarcity. In fact, the pullback in Bitcoin reserves is being met by profit-taking in top altcoins like XRP[6], Chainlink[7], and Litecoin[8].
Bitcoin Balance on Exchanges || Source: Twitter[9]
Due to their high correlation with Bitcoin, the prices of these altcoins have risen and so have their market capitalizations. In fact, the data for these coins unanimously point to enthusiasm and bullish sentiment in their markets.
The profit booking opportunities in altcoins may be a possible motivation for institutions and retail traders to keep HODLing. This makes Bitcoin unique when compared to other alternate assets in your portfolio. Unlike in the case of gold where the production doubles to meet the demand, Bitcoin production halves, and this may be the key to an exponential price rise that finally takes Bitcoin
