According to a report from The Block, this week’s Bitfinex Alpha report indicates a significant decrease in the inactive supply of Bitcoin that has not moved for over a year. This suggests that long-term holders are either continuing to reduce their holdings or moving their assets out of exchanges. Bitfinex analysts state that the current behavior of Bitcoin holders reflects the situation before the significant increase in the Bitcoin market in December 2020, indicating a potential similar growth phase. The four-year Bitcoin halving mechanism will reduce the block rewards earned by miners, slowing down the growth rate of Bitcoin supply. According to data from CoinMarketCap, the upcoming halving event is expected to occur on April 20th, reducing the block rewards from the current 6.25 BTC to 3.125 BTC. Based on historical trends, many of Bitcoin’s price surges have occurred within 12 to 18 months after a halving. Bitfinex’s observation of a decrease in long-term holder supply on exchanges aligns with data from CryptoQuant. The chart shows that Bitcoin exchange reserves have reached the lowest level recorded by CryptoQuant data, dating back to early 2021. In July 2021, Bitcoin exchange reserves fluctuated around 2.8 million coins, but now it has dropped to approximately 1.94 million coins, indicating a decrease of about 860,000 coins since CryptoQuant started recording this metric. After a significant price drop driven by large-scale liquidations in the past two days, some indicators are now stabilizing, including funding rates, indicating that traders’ attention has shifted back to the upcoming halving. Timo Lehes, co-founder of Swarm Markets, believes it is necessary to exercise caution as the halving event involves some forward-looking pricing of the market, which may result in a pullback.
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