The supply of Bitcoin (BTC) from long-term holders (LTH) on centralized exchanges (CEX) has been steadily declining. Given that it highlights an increase in profit taking by these holders, fueling doubts about the possible end of the ongoing bullish cycle for BTC.
However, as a Bitfinex report points out, this scenario could also reflect typical market behavior during pre-halving periods. The event, scheduled for this Saturday, April 20, will halve BTC rewards for miners, resulting in a reduction in supply and potentially impacting the price.
“This week's halving represents a key turning point for BTC price dynamics,” reads the report, “There is a notable increase in Bitcoin exiting CEXs, accompanied by a decline in inactive supply for over a year, at the lowest level of the last 18 months".
This behavior on the part of BTC holders follows that observed in December 2020, shortly before the upward price run.
CryptoQuant confirms this trend by recording a decline in Bitcoin reserves on CEX from 2.8 billion BTC to 1.94 billion since the beginning of 2021.
The recent price correction, although worrying, increases attention towards the halving, an event that could lead to an unpredictable price trend in the short term.
Although the halving is generally considered a bullish event in the medium term, sudden corrections and the current geopolitical situation cannot be ruled out, starting from the well-known conflict in Ukraine and the war in Israel with related threats from Iran.
Added to this is the unknown represented by capital flows derived from ETFs, an element absent in previous market cycles.
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