A phenomenon of unprecedented scale is currently shaking the Bitcoin market. Indeed, the main crypto exchanges are witnessing an unprecedented hemorrhage of their BTC reserves. Since the start of 2024, nearly $10 billion worth of Bitcoin has been withdrawn from these exchange platforms. A trend which could well announce the imminence of a major shortage on the market. The figures are also eloquent and suggest major turbulence to come.
Institutional juggernaut pumps Bitcoin reserves
At the origin of this massive draining of reserves is the juggernaut of recently unleashed institutional demand. With the long-awaited arrival of spot Bitcoin ETFs in the United States in early 2024, institutional investors have finally flocked to the market. After years of frustration at having to make do with derivative products, these players now have direct investment vehicles that faithfully replicate the price of Bitcoin.
As of March 28, the findings are clear: Scholarships already held only 2.3 million Bitcoin in reserve in total, an absolutely unprecedented low since April 2018. The pace of withdrawals also appears unsustainable, with daily records broken week after week. On March 27, a further 22,000 BTC ($1.54 billion) was withdrawn from major platforms in just 24 hours. A stratospheric figure, a sign of a deep and massive fundamental movement.
When halving exacerbates the shortage
But that's not all. In parallel with this unprecedented institutional rush, the next Bitcoin halving, scheduled for April 2024, will permanently dry up the available supply. Indeed, this major cyclical event will halve the issuance of new BTC by the blockchain, following the automatic reduction of rewards paid to miners.
After April 15, the supply entering the market each day will therefore only be around 900 BTC compared to 1800 currently. With an expansion of supply thus reduced by half, the pressure will increase even more on the meager residual reserves of the stock exchanges. A real perfect storm is therefore looming on the horizon in the Bitcoin market.
It is clear that all the elements are there to ensure that a massive shortage of Bitcoin does not occur in the coming months. Between the increase in institutional demand and the drastic slowdown in new supply, a perfect conjunction seems to be taking place. The impact could be devastating on the market, sending Bitcoin prices to unprecedented levels.
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