The “poor sentiment” surrounding Bitcoin dominated the trend over several weeks as its price mostly remained trapped below the $28,000 level.
However, more recent data is flashing bullish for the world’s largest crypto asset indicating that it could potentially be on the cusp of a bullish breakout.
Bitcoin Bottom Is In
Bitcoin’s tight-range consolidation may finally end. Glassnode co-founder Negentropic, for one, believes the bottom for the crypto asset is near and that it is only a matter of time before the price “goes off.”
According to his analysis, shorts are getting exhausted after failing numerous attempts to break below 200SMA, a level which he deems to be “a solid support.” With the 50SMA’s bullish crossover over 200SMA, Bitcoin is expected to flip the narrative in its favor soon.
#Bitcoin bottom is in
Shorts getting exhausted after failing numerous attempts to break below 200SMA, which is a solid support.
— (@Negentropic_) May 22, 2023
The development comes just days after the analytic firm noted that the conviction of existing Bitcoin holders remained “remarkably high,” even as the market witnessed extreme volatility and immense deleveraging over the last two years.
Santiment also observed that investors are moving their Bitcoin stashes from crypto exchanges to cold storage wallets. While existing supplies moving into self-custody is not a perfect indicator, the crypto analytic firm said that the declining quantities of BTC on exchanges generally hint at future bull runs.
Hence, a high accumulation trend in the backdrop of an arguably lackluster inflow of new demand and stagnancy depicted that investors view the current market condition as an opportunity to acquire more portions of the asset.
Confidence in Custodians at an All-Time Low
Bitcoin holders have lost confidence in centralized crypto exchanges, a trend that can be corroborated by the fact that supply held on exchanges has fallen to 5.84% – representing the lowest level in the past five and a half years.
The shift from custodians to self-custody systems gained traction at the beginning of 2022 and continued throughout the year. The decline became even more pronounced after the collapse of Sam Bankman-Fried-led crypto giant FTX Group following which the amount of BTC sitting on centralized platforms dropped below 7%.
Over the past few months, Binance has also seen a rise in bitcoin outflows, indicating that many users incline towards self-custody instead of a third-party custodian.