After rejecting at $15,960 on Nov.6 Bitcoin (BTC) price has been defending the $15,000 support level with strength. Based on four on-chain data points, analysts believe the rally might continue beyond $16,000.
Analysts have pinpointed lower Bitcoin exchange reserves, unmoved supply, a rise in “stronger hands,” and unrealized profits as factors for the rally to continue.
The number of BTC held on exchanges drops
Recently, Delphi Digital, an independent cryptocurrency research and consulting firm, released a report on the outlook of the Bitcoin market.
Paul Burlage, an analyst at Delphi, said that on-chain metrics generally portray strong momentum for Bitcoin.
Since Feb. 11, Bitcoin exchange reserves dropped from 2.96 million to 2.41 million. In dollar terms, a drop of 550,000 BTC is equivalent to $6.36 billion.
Falling Bitcoin exchange reserves is an optimistic occurance because it means fewer sellers are depositing BTC to exchanges. Burlage said:
“On Feb 11th, 2020, $BTC on exchanges hit its all-time high of ~2.96M. As of writing, $BTC on exchanges sits at ~2.41 M. This current trend has seen a divergence between BTC stock and price, which suggests a more sustainable move upwards for $BTC.”
Bitcoin exchange reserves. Source: Delphi Digital
Unmoved BTC supply spikes
While fewer sellers have been moving their funds to exchanges, the unmoved supply of BTC remains high.
On Sept. 9, Burlage explained that the percentage of unmoved supply for BTC hit an all-time high at 63.5%. Since then, it has declined slightly to 62%, but considering that price has risen substantially, it is a positive metric. He explained:
“We have seen a slight dip in the % of unmoved supply in the past year over the past week. After reaching an all-time high of around 63.5% unmoved supply on September 9th, we currently sit at around 62.0%.”
This shows investors are increasing “HODLing” BTC despite the recent rally, not taking large profits just yet.
No clear signs of a top yet
The number of “weak hands” or speculative buyers have noticeably declined in recent weeks, while stronger hands strengthened.
The flush out of short-term buyers and the entrance of long-term “HODLers” indicate that Bitcoin could see a prolonged rally.
This trend coincides with the resilience of Bitcoin above $15,000 and shows that the once heavy resistance level is close to evolving into a support area. Burlage noted:
“While local maximums for ‘weak hands’ trends downwards, we can not confirm that the recent speculative base increase has formed a top. With that said, the larger trend suggests stronger hands are populating short-term age bands rather than speculators.”
Unrealized Bitcoin profits signal the rally may continue
In July 2019, the price of Bitcoin peaked at around $14,000. At the time, Glassnode chief technical officer Rafael Schultze-Kraft said Bitcoin’s Relative Unrealized Profit hit 0.64.
Bitcoin Relative Unrealized Profit. Source: Glassnode
Currently, despite the price of Bitcoin being above $15,000, the Relative Unrealized Profit is at 0.53. This shows BTC has the potential to see a broader rally before a strong pullback.