Bitcoin reserves hit record low, triggering supply shock warning!
Bitcoin reserves fall below 2 million, hinting at an imminent price surge
Bitcoin’s exchange reserves have fallen to new lows, falling below 2 million BTC in April this year, representing less than 10% of its circulating supply.
This decline hints at a possible supply shock due to rising demand.
CryptoQuant data shared by Finbold on April 8 showed that exchanges hold just 1.94 million BTC, or about 9.8% of the 19.67 million BTC in circulation.
Since peaking at 2.85 million BTC in July 2021, these reserves have steadily declined as more investors choose to hold Bitcoin, showing a preference for long-term investments rather than immediate trading.
A supply shock occurs when the available supply of Bitcoin on exchanges suddenly drops while demand surges. This situation typically leads to a price increase due to buy orders being higher than sell orders.
Massive withdrawals from exchanges, which reduce trading supply, are the main cause of such shocks, which can lead to a significant increase in Bitcoin prices.
In addition, the Bitcoin halving event, which cuts miner rewards in half every four years, has also played a crucial role in reducing the amount of new Bitcoin supply, exacerbating the supply shock effect.
Bitcoin magazine recently highlighted this dire situation, noting that only 1.7 million Bitcoins are left on exchanges.
With the next halving approaching, the magazine predicts that a supply shock will be inevitable, which will significantly push up Bitcoin prices.
This halving, coupled with the reduction in foreign exchange reserves, could have a significant impact on the Bitcoin market, potentially leading to a significant price surge as supply continues to tighten against the backdrop of increased demand.
This development highlights the critical balance between supply and demand in the cryptocurrency space, highlighting the importance of strategic holding and timing in relation to market events such as the Bitcoin halving.
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