The upcoming Bitcoin halving is expected to cause a significant reduction in the supply of the cryptocurrency on exchanges, which will lead to a scarcity of Bitcoin in the market. This prediction is based on a report by Bybit, which states that if the demand for Bitcoin ETFs in the United States continues, exchanges will run out of Bitcoin after the halving.
According to data from CryptoQuant, Bitcoin reserves on centralized exchanges have already reached a three-year low of 1.94 million BTC on April 16. This decrease in exchange reserves is occurring amidst a broader market slump, with Bitcoin falling over 10% in the past week to $62,924.
Despite the current correction, Bybit, the world’s third-largest exchange, believes that Bitcoin prices will start recovering soon. Institutional interest in Bitcoin has been on the rise, with weekly inflows to spot Bitcoin ETFs slowing down since March. Last week, there were over $199 million worth of net inflows into these ETFs, compared to $2.58 billion in the week beginning March 11, according to Dune Analytics.
Currently, spot Bitcoin ETFs have accumulated over 841,000 BTC worth $52.9 billion, with net inflows of over $12.7 billion since their launch. Bitcoin investor allocation has also increased, with institutions allocating an average of 40% of their total assets to BTC, while retail investors average a Bitcoin allocation of 24%.
Bybit’s asset allocation report from Feb. 24 also revealed that both crypto-native firms and traditional institutions are gaining exposure to Bitcoin through ETFs or proxy stocks like MicroStrategy. The exchange expects more institutions to follow suit.
Overall, the Bitcoin halving is expected to have a positive impact on the cryptocurrency market, leading to more sustainable BTC mining and increased adoption by institutional investors.