Bitcoin is showing fresh bullish momentum as the exchange supply ratio falls sharply following the U.S. Federal Reserve’s recent interest rate cut. Analysts say the trend could pave the way for Bitcoin to test the $120,000 resistance level in the coming weeks.
The Fed’s decision to lower rates by 25 basis points has boosted risk appetite across markets, including crypto. Data from Binance shows Bitcoin’s exchange supply ratio dropped to 0.0291, indicating that more investors are withdrawing BTC from exchanges to hold long-term rather than selling.
Fed Rate Cut Sparks BTC Accumulation
According to a CryptoQuant analysis, reduced supply on exchanges is creating upward price pressure, as traders keep Bitcoin in private wallets instead of preparing to sell. This aligns with Bitcoin’s resilience above $115,000, reinforcing a bullish outlook.
Analysts caution, however, that if Bitcoin flows back to exchanges, it could signal profit-taking near the $118K–$120K range. Still, the dovish stance from the Fed is expected to support ongoing liquidity inflows into digital assets.
Supply Crunch Building Momentum
The declining exchange supply hints at a potential “supply crunch”, historically linked to sharp Bitcoin rallies. Meanwhile, the Bitcoin Scarcity Index has recorded its first major spike since June 2025, further underscoring tightening market conditions.
At the time of writing, Bitcoin trades at $116,374, slightly down 1.3% in 24 hours, but sentiment remains positive as long-term holders dominate activity.
Road to $120,000: Cautious Optimism
Market experts suggest that Bitcoin’s path to $120,000 depends on continued outflows from exchanges and broader stability in traditional markets. If these factors align, Bitcoin could break new ground in Q4, positioning itself for another historic rally.
For now, traders are watching closely as Bitcoin balances risk and opportunity at a pivotal price range.
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