Bitcoin Supply Drops on Exchanges 📉 – Fed Cut Fuels $120K Target
After a pattern of hiking interest rates to control inflation, the US Federal Reserve (Fed) reduced interest rates by 25 basis points this week, boosting the economy. Interest rate cuts may boost risky assets like Bitcoin.
Fed Lowers Interest Rate, Bitcoin Supply Ratio Falls
Arab Chain's CryptoQuant Quicktake report states that Binance's recent data reveals that the interest rate drop has revived BTC investors' interest. The exchange supply ratio has dropped to 0.0291, suggesting investors are withdrawing BTC from exchanges and holding it for the long term.
Arab Chain provided the following graphic to back their analysis: a falling exchange supply ratio as the BTC price rises. The expert said the interest rate drop encouraged risk appetite and market liquidity.
This indicates that the Fed's monetary policy will stay dovish, which may reduce BTC selling pressure. Bitcoin's stability over $115,000 and little exchange supply are contributing to relative purchasing pressure.
The expert said BTC may reach $120,000 if crypto exchange outflows persist. Following the Fed's decision, liquidity must flow into digital assets. The Arab Chain added:
The ongoing drop in Bitcoin's Exchange Supply Ratio and growing price support the positive scenario, particularly if conventional markets recover following the Fed's decision. If Bitcoin reenters exchanges, the Exchange Supply Ratio may rise again, signaling investors to take gains around 118K–120K.
Another crypto researcher, agreed. The expert posted the following graphic on X, suggesting BTC is locked in the bearish fair value gap. A daily closing above this red gap might push BTC to a new high.
The Bitcoin Scarcity Index spiked for the first time since June 2025, suggesting BTC price increases. BTC outflows from Binance continue to rapidly reduce the digital asset's active circulation supply.
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