All Bitcoin Is Getting Bought Up, Says #CryptoQuant

Bitcoin is facing a significant liquidity crisis amid surging demand for the digital currency, reaching unprecedented levels.

Analysts at CryptoQuant report a staggering increase in monthly demand for Bitcoin, soaring from 40,000 BTC at the beginning of the year to 213,000 $BTC currently. This surge is fueled by growing accumulation addresses, indicating heightened investor interest in acquiring Bitcoin.

The rise in demand is notably driven by Bitcoin exchange-traded funds (#ETFs ) in the US, excluding GBTC, which have seen their BTC balances swell from 117,000 to 185,000 BTC between February 25 and March 17.

Additionally, large holders, or "#Whales ," are aggressively accumulating Bitcoin, with the total balance of Bitcoin whales reaching an all-time high of 1.57 million BTC, up from 874,000 BTC at the start of 2024.

Concurrently, Bitcoin's sell-side liquidity is declining, with the total visible amount dwindling to 2.7 million BTC, down from the all-time high of 3.5 million BTC in March 2020.

This imbalance between soaring demand and diminishing sell-side liquidity has led to a historic low in Bitcoin's liquid inventory. Estimates suggest that current sell-side liquidity can only meet demand for the next twelve months, assuming accumulation address demand alone.

Excluding Bitcoin on exchanges outside the US exacerbates the situation, with the liquid inventory dropping to just six months of demand. This exclusion is due to US spot Bitcoin ETFs primarily sourcing Bitcoin domestically.

The convergence of these factors signals a bullish outlook for Bitcoin's price. According to CryptoQuant CEO Ki Young Ju, price corrections in such conditions typically entail a maximum drawdown of around 30% in bull markets, with a maximum pain level of $51,000.

Source - beincrypto.com

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