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Will Bitcoin Hit $120,000? How the Fed Cut Lowers Exchange Supply Ratio!
In recent bitcoin news, the US Federal Reserve (Fed) made a notable move this week by cutting interest rates by 25 basis points. This decision comes after a prolonged period of increasing rates aimed at controlling inflation. The Fed’s action is expected to ignite interest in risk-on assets, particularly Bitcoin (BTC), as investors seek opportunities in a more favorable economic environment.
According to recent insights, the interest rate cut has reignited enthusiasm surrounding Bitcoin. Data from Binance reveals a significant decline in the exchange supply ratio, now at 0.0291. This drop suggests that investors are opting to withdraw their BTC from exchanges, favoring long-term holding over immediate selling.
The Impact of the Fed’s Decision on Bitcoin
The declining exchange supply ratio is a clear indicator of shifting investor sentiment. As liquidity improves in the market, driven by the Fed’s dovish stance, the appetite for riskier assets like Bitcoin is rising. Recent analysis indicates that this trend could alleviate selling pressure on BTC, particularly as it stabilizes above the $115,000 mark.
If Bitcoin outflows from exchanges maintain their current momentum, the cryptocurrency could be poised to challenge the $120,000 resistance level. However, this scenario hinges on a continued influx of liquidity into digital assets, spurred by the Fed’s recent decision.
Arab Chain noted that the ongoing decline in the Exchange Supply Ratio, alongside rising BTC prices, paints a bullish picture for the cryptocurrency. Should traditional markets stabilize following the Fed’s announcement, this momentum could further enhance bullish sentiment. Conversely, should the Exchange Supply Ratio reverse and begin to climb again, it may signal that investors are preparing to realize profits near the $118,000 to $120,000 range.
Is a Supply Crunch on the Horizon?
The ongoing decrease in the exchange supply ratio suggests that Bitcoin may be nearing a bullish ‘supply crunch,’ potentially leading to significant price appreciation. Recent metrics, such as the Bitcoin Scarcity Index, have recorded their first spike since June 2025, indicating upward price pressure for BTC. Meanwhile, rapid BTC outflows from Binance are diminishing the active circulating supply of the digital asset.
However, it’s essential to remain cautious. Notably, the participation of whale investors in recent price movements has been minimal, which could introduce volatility. As of now, Bitcoin is trading at approximately $116,374, reflecting a 1.3% decrease over the past 24 hours.
Looking Ahead
As we analyze the current landscape for Bitcoin, several factors come into play. The Fed’s interest rate cut has certainly created a more favorable environment for risk assets. Still, the sustainability of this trend will depend on ongoing liquidity flow and investor behavior in the coming weeks.
For those keen to keep track of Bitcoin’s trajectory, consider following the latest crypto news. Additionally, for those looking to engage in trading, exploring options on Binance could be beneficial; you can check out their offerings here.
In conclusion, while the current indicators suggest a potential rally toward $120,000, investors should stay alert to market dynamics that could influence Bitcoin’s performance in the near term.
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