Bitcoin (BTC) is facing a dwindling supply as demand continues to surge, according to a recent report by on-chain analytics platform CryptoQuant. The report, titled “Weekly Crypto Report,” highlights a “sell-side liquidity crisis” that is unfolding in the Bitcoin market. The increased demand for Bitcoin, driven in part by the introduction of spot Bitcoin exchange-traded funds (ETFs) in the United States, is causing a decline in sell-side liquidity. As a result, the liquid inventory of Bitcoin has reached its lowest level ever in terms of months of demand. The report suggests that this supply dynamics imbalance may have a lasting impact, potentially lasting until the first quarter of 2025.
It’s important to note that the report only takes into account demand from “accumulating addresses,” which are addresses that have no outbound transactions. This means that the actual net demand for Bitcoin may be even higher than what the report suggests. When assessing the Bitcoin supply strictly on United States exchanges, the supply is only able to meet demand for half the time.
In addition to the supply and demand dynamics, there has been recent activity involving Bitcoin mined in 2010. CryptoQuant CEO Ki Young Ju commented on this, describing it as a wake-up call for the sell-side liquidity crisis. This activity involves the movement of coins that have been dormant since 2010 to a newly created wallet address.
Ki Young Ju has been a proponent of the narrative surrounding the supply squeeze caused by ETFs, predicting in mid-March that it would last for six months. However, there have been consecutive net outflows from these products recently, although this trend appears to be reversing. Data from Farside, a UK-based investment firm, shows that there were net inflows of $400 million on March 25, the highest in two weeks.
It’s important to note that this article does not provide investment advice or recommendations. Readers should always conduct their own research and exercise caution when making investment decisions.