Author: Vince Quill, CoinTelegraph; Translated by: Tao Zhu, Golden Finance
According to data from June 19, 2024, Bitcoin exchange reserves (i.e. the total amount of Bitcoin available on exchanges) have fallen to their lowest level in 3 years.
CryptoQuant's analysis shows that there are currently 2,825,703 Bitcoins remaining on exchanges. In January 2024, the balance of Bitcoin exchanges hovered around 3,039,000.
Lower foreign exchange reserves (sometimes called foreign exchange balances) indicate lower selling pressure and potential supply shocks due to relatively less supply available for purchase.
Bitcoin exchange balances as of June 19, 2024. Source: CryptoQuant.
Pressure from Bitcoin ETFs
In January 2024, after the United States approved a Bitcoin ETF, asset management companies such as BlackRock increased their holdings, which put additional pressure on the supply of Bitcoin. As of June 6, BlackRock's iShares Bitcoin Trust (IBIT) held about 274,000 Bitcoins. BlackRock's ETF is only one of the 11 Bitcoin ETFs currently traded in the United States.
In May 2024, monthly inflows into digital asset funds reached $2 billion, driven primarily by inflows into Bitcoin investment funds and products. According to the Coinshares Weekly Fund Flows Report on June 17, Bitcoin investment vehicles hold nearly $73 billion in Bitcoin worldwide.
However, the same report also shows that weekly outflows from Bitcoin investment vehicles were $621 million in the week ending June 15, 2024. This was the largest and most significant outflow since the week ending March 22, 2024.
Coinshares speculates that the Fed’s “more hawkish than expected” rhetoric, suggesting that the Fed will maintain high interest rates, has led to capital flight from fixed supply assets such as Bitcoin.
Despite the increase in institutional interest, industry experts like Franklin Templeton CEO Jenny Johnson believe that institutional adoption is not yet in full swing. “This is really the first wave of early adopters, and I think the next wave is going to be the larger institutions,” Johnson told an interviewer on CNBC.
If Johnson’s prediction comes true, institutional capital will continue to flow into Bitcoin, putting additional pressure on low exchange supply in the coming months.
Halving in April 2024
Additionally, after the halving event in April 2024, Bitcoin’s supply will be further limited due to the reduction in block mining rewards.
Before the most recent halving, miners received 6.25 bitcoins for each successfully mined block, but after the halving, miners received 3.125 bitcoins for each successfully mined block.
