The Bitcoin supply on the exchanges is drying up at a conspicuous low

The price of Bitcoin (BTC) has performed very well in the last few months. From the local low in September to the high at the end of last week, the price has already increased by 77 percent, although an important factor may have been the number of coins available on exchanges. According to Bitfinex, this number has once again reached a low point.

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Buying Bitcoin on exchanges continues

This is what the crypto exchange writes in its weekly Bitfinex Alpha research report. The total number of BTC on measured crypto exchanges was at its lowest level in 6 years last week. More specifically, the number of coins has dropped from 2.6 million BTC to around 2 million BTC.

This trend has been going on for some time – the crash at the start of the coronavirus pandemic in 2020 was a turning point. After this low point, the number of coins on exchanges dropped dramatically, even during last year’s bear market.

According to data from blockchain analytics firm CryptoQuant cited by Biftinex, the implosion of FTX late last year was a key driver of the decline. Afterwards, trading volumes across the entire crypto market fell significantly. At the beginning of the year, they were still at their lowest level since the last bull market, although the price had already risen sharply.

The researchers describe that the upward trend is caused not only by the significantly lower supply, but also by the low trading volumes and the suddenly high demand.

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Bitfinex expects interest rate cuts in 2024

Every week in the report, Bitfinex also explains what the situation is in the rest of the economy. For example, the American labor market has cooled somewhat and consumers are borrowing slightly more than before.

No rate cuts are currently expected, but that could change by the middle of next year. By 2025, many companies’ debt will expire and they will need to refinance. This increases pressure on the US Federal Reserve to cut interest rates again.

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