Bitcoin is on the verge of a supply crunch, according to the latest CryptoQuant Weekly Crypto Report published on March 26.
The analysis suggests that a "sell-side liquidity crisis" is looming, caused by the growing demand for #bitcoin and, in particular, the dot-com introduction of bitcoin exchange-traded funds (ETFs) in the United States.
This combination of increasing demand and decreasing supply could lead to a dramatic change in bitcoin market dynamics, irreversibly altering the supply situation by early 2025.
CryptoQuant's report shows the harsh reality of reduced liquidity on the side of bitcoin sellers.
"Record bitcoin demand combined with reduced sell-side liquidity has driven bitcoin's liquidity reserves to their lowest level ever in terms of months of demand. " The platform notes this and estimates that current seller-side liquidity reserves will only be able to meet growing demand for 12 months.
The analysis only takes into account "stored addresses" - wallets that have never conducted an outbound transaction - suggesting that actual demand could be even greater.
CryptoQuantum explains that "we only consider demand from 'hoarded' addresses because they can be seen as the lower limit of bitcoin demand.
Given that bitcoin is only available on US exchanges, this halves the time in which supply can meet demand.
If we exclude bitcoin on non-US exchanges, the liquid supply of bitcoin is reduced to six months of demand.
"We excluded these exchanges given that U. S. spot bitcoin funds only receive bitcoin from U. S. companies," the report said.
Ki Young Ju, CEO of CryptoQuant, appeared on Channel X (formerly Twitter) to discuss selling the nascent liquidity crisis.
He commented on the alarming movement of bitcoins mined in 2010 that have been lying dormant since then and are now being moved to new wallet addresses.
There have been outflows from ETFs for some time, but recent trends suggest otherwise.
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