Bitcoin’s Activity Rises as Supply Increases

A noticeable rise in Bitcoin‘s active supply over the past 180 days has sparked speculation about an impending selling wave. Analyst Axel Adler Jr. from CryptoQuant pointed out that dormant coins are entering circulation. While the supply increased by just 2.4% in June, it aligns with an early distribution phase as Bitcoin’s price hovers around $118,000. With a market cap of $2.35 trillion, surpassing the $120,000 threshold could incrementally boost active supply to previously observed peaks.

What Does the Supply Increase Imply?

The recent uptick in supply movement within 180 days suggests coins are being distributed across different addresses, often a precursor to profit-taking. This trend, highlighted by Adler, suggests a potential onset of a new trend, despite its low current level.

Historical precedents underline this pattern. In early 2024, when Bitcoin’s price hit $70,000, supply activity peaked at 20%. Later that year, as it reached $100,000, activity surged to 18%.

Is Bitcoin Entering an Early Distribution Phase?

Indeed, the modest increase in active supply signals the start of a cyclical process. Should Bitcoin’s price maintain its strength, as per Adler, the active supply rate may rise to 8-10% and potentially hit previous highs. This activity could markedly affect investor sentiment, with more profit-taking exerting pressure while new market entrants sustain momentum.

Despite recent minor price pullbacks, the substantial market cap allows for liquidity. Short-term declines don’t overshadow the larger trend, with active supply and price movement harmony being crucial.

Current supply activity is lower than in past cycles, indicating sellers aren’t hastily liquidating holdings. This suggests the rally still has room to continue, representing a pause rather than a conclusion. If Bitcoin breaches the $120,000 mark, expect sharper data spikes.

– Comparison to historical data shows distinct phases in Bitcoin’s activity.
– Despite low levels, supply activity aligns with past profit-taking trends.
– Price momentum and market cap provide a strong foundation for future movements.

The continual analysis of Bitcoin’s active supply and its price trajectory suggests that while immediate selling pressure is not overwhelming, market dynamics could shift as key price thresholds are approached.