An emerging crypto analyst is saying that demand for Bitcoin remains strong as ever according to a series of on-chain metrics.
In a tweetstorm, the analyst who goes by Dilution Proof lays out a number of clues signaling that the world’s biggest crypto asset by market cap is seeing a massive influx of buying power.
[adinserter block="1"]Dilution Proof points out that Bitcoin’s monthly close was accompanied by large amounts of exchange withdrawals, indicating that investors with deep pockets are buying BTC.
The analyst also observes that BTC’s value continues to rise amid dropping Bitcoin balance on exchanges, suggesting that the leading crypto asset is being taken off the market and creating a supply crunch.
“So is there still demand for bitcoin then?
Short answer: yes
Slightly longer answer: let’s look at some trends
The declining exchange balances since last year’s COVID-19 market panic is perhaps the most famous one, and overall still is intact.”
Dilution Proof adds that exchanges are not the only ones experiencing a sharp reduction in BTC supply.
“A similar pattern can be witnessed at the balances of over the counter (OTC) trading desks. The supply shortage is real; there is a decreasing amount of coins circulating on the market, which means that price must go up to entice HODL’ers to sell.”
The trader notes that Bitcoin has witnessed a drastic decrease in liquid market supply, suggesting that the illiquid BTC, or Bitcoin that is in the hands of long-term HODLers with little to no history to selling, is growing.
[adinserter block="1"]The on-chain analyst is looking at the drastic surge in stablecoin reserves on spot exchanges as well, indicating that traders are on standby with large amounts of capital, waiting for an entry point to place their longs.
Dilution proof concludes by asserting that now that BTC has undergone a technical correction, most market cycle metrics are pointing towards more room for growth.
“Compared to 2017, the bull run was intense; some exhaustion was normal
– The market was (over)leveraged, but now less so
– The demand for Bitcoin appears strong as ever
– If this cycle is like the others there is room for growth on most market cycle metrics.”
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