Bitcoin (BTC) Might Be Facing a Potential Supply Squeeze, One That Could Push Its Price Higher

Bitcoin (BTC), at press time, was trading at $101,718 on the charts following gains of 1.6% in 24 hours. As expected, the king coin continues to

Bitcoin (BTC) price continued its rally on Monday, adding another 1.6% in 24 hours to trade at $101,718 at press time. This comes as BTC’s market capitalization remained above $2 trillion, out of a total crypto market cap of over $2.7 trillion.

According to data from CryptoQuant, Bitcoin’s supply in the market has dropped to a 7-year low after spot exchange reserves fell to their lowest level since mid-2018.

The Bitcoin held on spot exchanges now stands at 1,055,716 BTC, with these reserves recording a steep drop over the past month amid Bitcoin’s rally past $100,000 to new all-time highs.

This supply squeeze is being driven by a lack of selling pressure from traders, despite Bitcoin’s recent gains.

Data from 10X Research showed that Coinbase, which has the highest Bitcoin reserves, recorded 72,000 BTC in outflows in the last 30 days. These outflows comprised nearly 10% of the exchange’s Bitcoin balance.

29,000 BTC was also withdrawn from Binance within the same period, while Kraken’s outflows accounted for more than 7% of its total Bitcoin holdings.

The exchange netflow data for the last 30 days also revealed that Bitcoin recorded 22 days of negative netflows from spot exchanges.

This highlighted the lack of selling pressure from traders, with the outflows indicating that more BTC was being withdrawn from exchanges than being deposited.

According to the data, most traders opted to hold Bitcoin despite its recent gains, in a sign of their long-term bullish outlook on the market.

This unwillingness to sell was met with a spike in institutional demand, as seen in the inflows to spot Bitcoin exchange-traded funds (ETFs).

According to SoSoValue data, the total inflows to spot Bitcoin ETFs in the last three weeks have crossed $5 billion, as these assets are inching closer to holding 6% of Bitcoin’s total market capitalization.

Inflows into these ETFs have also been positive for the last 12 consecutive days. If these inflows continue, it could trigger an additional supply squeeze on Bitcoin that could push the price higher.

Meanwhile, long-term Bitcoin holders are known to sell whenever the market hits a local top. As AMBCrypto reported earlier this month, this cohort started selling their BTC holdings, which stalled the coin’s rally.

The Binary Coin Days Destroyed (CDD) has been at 1 over the last five days, which implied that long-term holders might still be selling their holdings.

If this is the case, it could lead to Bitcoin avoiding a potential supply squeeze if the coins being sold by this cohort are enough to absorb the buy-side pressure.