Reduced Selling Pressure
Bitcoin’s market is showing signs of reduced selling pressure following a period of intense investor activity. This shift is evident in the declining deposits into exchanges and a notable recovery in Bitcoin’s price over the past three weeks.
Potential Relief Rally
Analysts at CryptoQuant suggest that continued low selling pressure could lead to a relief rally for Bitcoin (BTC). This positive outlook is supported by the Federal Reserve’s recent decision to cut interest rates by 25 basis points during the Federal Open Market Committee (FOMC) meeting.
Bitcoin has rebounded from $80,000 on November 21 to a monthly high of $94,000. At the time of writing, BTC is trading around $90,000, marking a 1% weekly increase.
Exchange Deposits Decline
The decline in exchange deposits is significant. Bitcoin deposits into exchanges have dropped from 88,000 BTC in mid‑November to 21,000 BTC today. This decrease began after Bitcoin reached its all‑time high of $126,000, as large investors reduced their transfers to trading platforms.
Currently, the share of total deposits from large investors has fallen from a 24‑hour average high of 47% in mid‑November to 21%. Additionally, the average deposit size has decreased by 36%, from 1.1 BTC to 0.7 BTC over the same period.
Investor Loss Realizations
The reduction in exchange deposits and downward price pressure coincides with large investors and short‑term holders realizing their losses. About a month ago, new and old whales realized $646 million in losses, the largest since July. Since then, this group of investors has realized at least $3.2 billion in losses.
Short‑Term Holder Activity
Short‑term holders have been selling their assets at a negative profit margin for the past four weeks. The lowest reading is at –7%, with the Spent Output Profit Ratio (SOPR) hovering below 1.
Historical Context & Future Outlook
Historically, selling pressure tends to ease when market participants realize significant losses. If this trend continues, Bitcoin could return to the $99,000 level, which is considered the lower band of the Trader On‑chain Realized Price range. This level often acts as resistance during bear cycles, along with the on‑year moving average and the Trader On‑chain Realized price, which are $102,000 and $112,000, respectively.
The current market conditions indicate a potential relief rally for Bitcoin if selling pressure remains low, further supported by the recent rate cut from the Federal Reserve.
