Bitcoin exchange reserves have plummeted to 2.43 million coins as on-chain metrics suggest the cryptocurrency remains undervalued despite trading above $85,000, according to analysis published Wednesday in a CryptoQuant Quicktake report. Crypto analyst BorisVest identified several indicators pointing to continued bullish sentiment for the world's leading digital asset.

What to Know:

• Bitcoin exchange reserves have dropped from 3.40 million during the 2021 bull run to 2.43 million currently
• The Bitcoin Stablecoin Supply Ratio (SSR) stands at 14.3, well below 2021 levels of around 34
• Analysts suggest these metrics indicate Bitcoin may still be undervalued at its current price of $85,550

The sharp decline in exchange reserves represents a significant shift in investor behavior that hasn't been observed for seven years. This metric tracks the amount of Bitcoin held on centralized exchanges and available for immediate trading.

When reserves decrease, it typically signals fewer coins available for sale as investors move assets to long-term storage solutions.

"The Bitcoin exchange reserve data shows that Bitcoin is being withdrawn from exchanges after seven years," BorisVest noted in the analysis. "The fact that Bitcoin is not readily available for sale suggests it is being held for the long term. A decrease in Bitcoin supply supports a potential price increase."

This withdrawal pattern typically indicates growing investor confidence and could signal undervaluation, experts say. As supply tightens on exchanges while demand potentially increases, upward price pressure often follows – a fundamental market dynamic that applies to cryptocurrencies despite their high volatility.

Stablecoin Ratio and Market Sentiment Indicators

The Bitcoin Stablecoin Supply Ratio (SSR), another key metric highlighted in the report, currently registers at 14.3. This figure represents the ratio between Bitcoin's market capitalization and the market capitalization of all stablecoins, providing insight into potential purchasing power within the ecosystem.

BorisVest's analysis suggests this ratio indicates substantial buying power remains available should Bitcoin experience further price declines.

The metric has not yet approached its 2021 bull market levels of approximately 34, which analysts interpret as a sign that Bitcoin remains undervalued at current market prices.

The SSR metric increases as Bitcoin's price rises, reflecting diminished purchasing power relative to the cryptocurrency's market capitalization. This relationship helps analysts identify potential overvaluation scenarios. Current readings suggest the market has significant room for growth before reaching previously observed peak values.

In a separate but related development, analyst Titan of Crypto identified a "hidden bearish divergence" forming in USDT dominance on weekly timeframes. This technical pattern typically signals investors moving capital from stablecoins back into cryptocurrencies and other risk assets.

Such movements often precede broader market shifts toward risk-on sentiment, potentially benefiting Bitcoin and alternative cryptocurrencies in coming weeks. The pattern suggests improving market confidence despite recent volatility.

Meanwhile, Bitcoin's weekly Relative Strength Index (RSI) has broken above its extended downtrend line, a technical development that some market observers interpret as a potential precursor to price recovery. Some analysts have cited this breakout while projecting potential price targets exceeding $100,000 in coming months.

Exchange net flow data further supports the possibility that a Bitcoin rally may materialize sooner than widely anticipated. At press time, Bitcoin trades at $83,506, representing a modest 0.9% decrease over the past 24 hours.

Final Thoughts

The convergence of declining exchange reserves, favorable stablecoin ratios, and improving technical indicators presents a compelling case for Bitcoin's potential undervaluation. While price volatility remains a constant in cryptocurrency markets, on-chain metrics suggest underlying fundamentals may support higher valuations in the near term as investors continue withdrawing Bitcoin from exchanges at rates not seen in seven years.