The price of Bitcoin has rallied significantly, surging over 20% from its August 5 low of around $49,557. Analysts believe the recovery could continue, potentially pushing Bitcoin to around $68,000 in the coming weeks. At press time, BTC was trading at $64,309, a 4.92% surge from the intra-day low.

Declining Bitcoin Supply on Exchanges

One of the key pointers supporting the bullish outlook for Bitcoin is the continued supply depletion on centralized exchanges. In this regard, since August 23, the amount of Bitcoin held on exchanges was at around 2.68 million BTC—11% lower than the beginning of the year when it reached 3.011 million BTC. This comes against a 43% asset value increase this year. 

The diminishing supply on exchanges indicates that traders increasingly decide to hold Bitcoin rather than sell it, showing confidence in the asset’s further appreciation. If demand remains high, this could lead to a squeeze in the supply, driving up the price.

Source: CryptoQuant

These have been followed by signs of strength in institutional interest toward Bitcoin, particularly spot Bitcoin exchange-traded funds. As a result, flows to U.S.-based spot Bitcoin ETFs are positive over nine of the last 13 trading days.

Whale Accumulation Points to Continued Demand

Concurrently, an additional bullish signal for Bitcoin emanates from its large holders, “whales.” According to data from Santiment, addresses holding between 100 and 1,000 BTC now hold about 94,700 more over the past six weeks. This has built up into Bitcoin’s market value soaring by 13% since reaching its July 5 low of $53,550

Source: CryptoQuant

The accumulation by these significant holders points to what they expect: further price appreciation in the short term. As the most important market players continue to build their positions, this will again likely exert upward pressure on Bitcoin’s price toward new heights.

Technical Breakout from Bull Pennant Formation

From a technical perspective, Bitcoin’s price seems promising. The cryptocurrency has consolidated into a bull pennant pattern after bottoming at $49,557 on August 5. Normally, it should be a bullish continuation pattern in which the price consolidates inside a triangle, just before breaking out upside

In fact, it was just a few days ago that the price of Bitcoin broke above this pennant’s upper trendline level of around $60,300, where it has since been holding above in trading. If the bulls sustain this momentum, the pattern suggests an upward target of around $68,000, a 12.4% increase from current levels. 

Based on the pattern, if bulls keep their momentum, an upward target is around $68,000—an upside of 12.4% from current levels. In addition, Bitcoin’s surge above $61,800 on August 22 led to a successful retest of the 200-day exponential moving average at $59,446 as support. It now makes for a firm support area that further concretizes the bullish outlook. 

Fed Policy Shift and Market Sentiment

Recent developments in U.S. monetary policy are also said to have strengthened the general market sentiment toward Bitcoin. On August 23, BTC rallied by 6% on news that Federal Reserve Chairman Jerome Powell hinted the bank could start easing policy sometime next month. 

Subsequently, that paves the way for lower interest rates, which is positive for risk assets, and Bitcoin belongs to that class of assets. As a result, it helped push Bitcoin to nearly $64,450, further adding to optimism in the trader and investor community.