Analysts say Bitcoin breaking through its all-time high is "just a matter of time".

In a recent article by analyst Willy Woo, the recent trends in Bitcoin inventory on centralized trading platforms were analyzed. Figure 1 shows the changes in spot and paper BTC reserves over the past few years.

In the past few months, the amount of Bitcoin in spot wallets has been decreasing. Currently, the total amount of Bitcoin held in centralized entities has dropped to only 2.3 million coins. It is evident that the sum of spot and "paper" BTC (highlighted in purple) is also decreasing. Here, "paper" BTC refers to derivative products related to cryptocurrencies that investors do not actually need to own.

Therefore, given that the total inventory of cryptocurrency exchanges has decreased, it appears that the decline in spot BTC is not due to the replacement of paper BTC.

Generally speaking, the supply of exchanges is considered as part of the supply of Bitcoin and is available for trading. Therefore, the reduction in available supply may be a positive signal for cryptocurrencies due to the way supply and demand dynamics work.

From the chart, it can be seen that the decline in exchange inventory occurred during a period of distress after the cryptocurrency price reached an all-time high (ATH). As Woo pointed out, when everyone was panicking because the price of Bitcoin had not risen in the past two months, available BTC was quietly being bought up, and importantly, there was no physical BTC being printed to replace it.

Therefore, during such a period, a decrease in available supply may be a favourable signal for Bitcoin. "BTC breaking through its historical high is only a matter of time," the analyst said.

In another X post, Woo also discussed how the capital inflow of Bitcoin has just started to recover after a sharp decline earlier. The network inflow surged to its historical high, but they observed a significant slowdown in subsequent consolidation.

The inflows of spot exchange-traded funds (ETFs), highlighted in light green, have also disappeared earlier, but now they are following these new ones.

Bitcoin had previously rebounded to a high of $71,000, but in the past few days, it seems to have declined and is currently below $68,000.

(Data source: Keshav Verma)