A 50% decrease in active Bitcoin supply over the last 3 months: Is it a bullish or bearish indicator?
The cryptocurrency market is still experiencing sharp fluctuations, but some indicators may suggest the possibility of a recovery for Bitcoin (BTC) soon.
Among these indicators, active supply, also known as hot supply, stands out, which is the amount of Bitcoin available for active trading over a short period.
According to data from "Glassnode," the active supply of Bitcoin—which tracks coins that are less than a week old—has decreased by 50% over the past three months, dropping from 5.9% to 2.8% of the total circulating supply.
Does the decrease in active supply indicate a bullish trend?
A decrease in active supply could be a positive indicator, reflecting an increase in holding behavior of Bitcoin rather than short-term trading.
When investors decide not to sell their assets, it may signal their expectation of rising prices in the future.
Additionally, with the decrease in circulating supply, sharp price fluctuations diminish, which may pave the way for market stability and price increases in the medium term.
However, this requires strong demand, which is currently not sufficiently available, as shown by the evident decline in flows towards Bitcoin ETFs.
