Dollar liquidity dey surge, falling reserves dey signal Bitcoin rally
Bitcoin sidon comot from di August 14 high of $124,474 go reach about $111,086 as traders dey collect profit. Di main signs show say e fit rally again. Di Trade-Weighted U.S. Dollar Index (Broad) don stop to dey fall and e dey climb, meaning say renewed dollar liquidity dey enter risk assets like Bitcoin.
On-chain metrics show net spot inflows of $47 million, exchange reserves don drop to about 2.55 million BTC, and Binary Coin Days Destroyed (CDD) reading na 0, meaning long-term holders no dey move. Di fall for exchange reserves dey make dis matter stronger by reducing supply.
For history, when dollar liquidity rise, institutions dey put money enter crypto. If di recent rise for dollar index continue, e fit help Bitcoin go higher. Traders suppose dey watch spot flow data and exchange reserves for confirmation. If net buys steady and reserves dey low, e dey normal to get new price rise. Short-term traders fit look for fresh momentum, while long-term investors fit benefit as supply tight and sell pressure reduce.
Bullish
Di konbiahin weh di di di dollar liquidity dey rise, net spot inflows, exchange reserves wey dey fall an binary CDD reading wea na zero, e dey create strong supply-demand situation wey dey usually happen before Bitcoin rally dem. For 2021, one increase for di Trade-Weighted U.S. Dollar Index come happen at di same time as institutional on-chain inflows, wey mek price rise for plenty weeks. Right now, long-term holders no dey active, so di sell-side pressure don reduce. If spot inflows still dey continue an exchange reserves dey drop more, di available sell-side supply go tight, wey fit cause short-term rally. For long term, steady macro liquidity and di ongoing supply wahala dey support higher Bitcoin price level dem, so dis news na bullish signal for traders.