The upcoming Bitcoin halving is expected to cause a significant reduction in the supply of Bitcoin on cryptocurrency exchanges within the next nine months. This prediction is based on the current inflows from Bitcoin exchange-traded funds (ETFs) in the United States, as stated in a report by Bybit on April 15.
According to data from CryptoQuant, Bitcoin reserves on centralized exchanges dropped to a three-year low of 1.94 million BTC on April 16. This decline in exchange reserves suggests that the supply of Bitcoin available on exchanges is decreasing rapidly.
The report from Bybit comes at a time when the overall market is experiencing a slump, with Bitcoin falling over 10% in the past week to $62,924, according to CoinMarketCap. However, Bybit, which is the third-largest exchange in the world, believes that Bitcoin prices will soon recover from this correction.
Institutional interest in Bitcoin has been steadily increasing, with weekly inflows into spot Bitcoin ETFs slowing down since March. Last week, there were over $199 million worth of net inflows into the ETFs, compared to $2.58 billion in the week beginning March 11, as reported by Dune.
Despite the recent market downturn, Bitcoin ETFs have accumulated over 841,000 BTC, valued at $52.9 billion, with a net flow of over $12.7 billion since their launch. This indicates that investors are still showing confidence in Bitcoin as a long-term investment.
Bybit’s asset allocation report from February 24 reveals that institutions are allocating an average of 40% of their total assets to Bitcoin, while retail investors have an average allocation of 24%. This demonstrates the growing interest and acceptance of Bitcoin among both crypto-native firms and traditional institutions.
Bybit expects that more institutions will continue to increase their exposure to Bitcoin through ETFs or proxy stocks like MicroStrategy. The upcoming Bitcoin halving is also expected to lead to more sustainable Bitcoin mining practices, according to a separate report.
Overall, the reduction in Bitcoin supply on exchanges, coupled with the increasing institutional interest, suggests a positive outlook for the future of Bitcoin.