Bitcoin rebounds on Wall Street open as exchange BTC reserves plunge after $42K dip

Bitcoin (BTC), which had fallen below $50,000 on December 8, was able to recover as Wall St. trading opened with a bullish note.

BTC/USD 1-hour candle charts (Bitstamp). Source: TradingView

Bitcoin market ditches “extreme fear”

Data from TradingView and Cointelegraph Markets Pro captured a classic rally in BTC/USD hourly timeframes. It gained $2,000 in one-hour candles.

Before Bitstamp’s dramatic trend change, the pair hit daily lows at $48,656 before reaching the psychologically significant $50,000 mark.

Get ready to get your feet wet
Zhu Su (@zhusu), December 8, 2021#Bitcoin held critical level and continues likely to a new test of $51.6K or $53.6K. Nice!
— Michael van de Poppe (@CryptoMichNL) December 8, 2021

Positive signals started to emerge from well-known social media personalities, and sentiment also felt the benefit. It was the first time that “extreme fear” had been extinguished since the Dec. 3 crash below $42,000.

Rekt Capital, a popular trader, earlier noted that the weekly chart showed healthy behavior. Meanwhile, Rekt Capital suggested that BTC price action could mirror September’s recovery. This required that you act between two exponential moving averages (EMA) lines.

He tweeted, “Bitcoin could be repeating the consolidation period it experienced after its May 2021 crash.”

“This consolidation occurs between the blue 50-week EMA Support and green 21-week EMA Resistance.”

BTC/USD 1-week candle chart annotated (Bitstamp). Source: Rekt Capital/ Twitter

Exchange Bitcoin holdings are draining faster than before the sell-off

The Dec. 8 backdrop of network fundamentals causing spot price action to ebb and flow by, saw on-chain metrics continue to be positive against the backdrop of new record highs for network metrics.

Related: The third-biggest Bitcoin whale holds $6B after “whopping” 2.7K BTC buys-in

According to Glassnode data, almost 80% of BTC supply was still profitable at lower levels. This despite it being a one-month low.

Chart: BTC 1-hour Supply % in Profit (7-day Moving Average) Source: Glassnode/ Twitter

The BTC balance on Exchanges is positive, but they are at their lowest level in many years. They are also far lower than when Bitcoin was traded at four figures.

The trend accelerated last weekend despite the fact that the dip last week failed to reverse it, according to data from CryptoQuant, an on-chain analytics platform.

Chart of BTC exchange reserves. Source: CryptoQuant