Bitcoin (BTC) Exchange Reserves vs. Price | Source: CryptoQuantThe Exchange Reserves metric depicted above, tracks real-time changes in the number of BTC coins deposited on crypto exchanges and trading platforms. Typically, it is a bearish signal when exchange supply increases and vice versa.
Firstly, an increase in Exchange Reserves, as observed above, indicates that more investors are looking to explore short-term trading opportunities, than those opting for long-term storage.
Secondly, increasing Bitcoin deposits across crypto spot trading platforms and exchanges effectively dilutes the market supply.
Hence, without a corresponding increase in Bitcoin market demand this week, the additional $1.2 billion (30,000 BTC) deposited on exchanges over the weekend could trigger a price pull-back in the days ahead.
Bitcoin Price Forecast: The Bulls Could Endure a Consolidation Phase
The rising Bitcoin Exchange Reserves suggest that a significant number of BTC holders are considering short-term profit taking opportunities. If the bears keep adding billions of dollars worth of BTC to the market supply, the bulls could eventually succumb to the fatigue.
The daily Relative Strength Index data also corroborates this Bitcoin price forecast. As of November 12, BTC RSI currently stands at 81.69.
Typically, an RSI value greater than 70 is a clear indication that the asset is approaching oversold territory. Hence, with the bulls running out of steam the rising BTC market supply puts the Bitcoin price in danger of a pull-back.
If that happens, the Bitcoin bulls could mount a significant support wall at the 20-day EMA price of $34,780. With the sentiment surrounding the crypto market still firmly bullish, BTC will likely attract buying interest to force a rebound at that range.
However, losing that support level could send BTC price spiraling toward the EMA-50 of $32,000, which is the next significant support territory.