Despite Bitcoin's recent challenge of $100,000 failing, Bitwise's European research director André Dragosch shared data today indicating that the illiquid supply of Bitcoin has reached an all-time high, while exchange balances have hit a multi-year low. The increasing scarcity of Bitcoin in the market suggests that rising demand may have bullish implications for Bitcoin's future.
Bitcoin surged strongly after Trump's victory last month, reaching a high of $99,588 on the 22nd of last month, but subsequently failed to challenge $100,000, dropping back to $90,791 on the 26th. It has been fluctuating between $95,000 and $98,000 in recent days, currently reported at $95,383, amid fierce battles between bulls and bears.
Despite Bitcoin's recent failure to challenge $100,000, Bitwise's European research director André Dragosch pointed out today that the illiquid supply of Bitcoin has reached an all-time high, while exchange balances have hit a multi-year low. The increasing scarcity of Bitcoin in the market suggests that rising demand may have bullish effects on Bitcoin.
Nearly 75% of the supply is classified as 'illiquid', with the remaining supply on exchanges accounting for less than 14%, indicating that the supply scarcity of Bitcoin is continuing to intensify.
Coinglass data shows that as of the 1st, the Bitcoin balance across all exchanges in the market is only 2.27 million, setting a new multi-year low.
As the liquidity of Bitcoin on exchanges continues to decrease, in the past 10 days, Microstrategy has significantly increased its holdings by 100,000 Bitcoins, raising its total holdings from 280,000 to 387,600, further reducing the circulating supply of Bitcoin in the market.
With more and more enterprises beginning to mimic the Microstrategy model, raising funds through convertible bonds, new stock issuances, or bank loans to purchase Bitcoin and hold it as a long-term asset on their balance sheets, coupled with a continuous net inflow growth trend in Bitcoin spot ETFs, institutional funds are flooding in, further exacerbating the supply tightness in the market.
This raises a thought-provoking question: can the market continue to meet the massive demand from enterprises and institutional clients amid the declining exchange balances? If the Bitcoin balance on exchanges continues to drop to lower levels, and even faces liquidity exhaustion, will the price of Bitcoin experience more severe fluctuations, or even rise to new historical highs?
In the face of market uncertainty, investors may need to prepare psychologically for potential high volatility and closely monitor exchange balances, net inflows into Bitcoin spot ETFs, and institutional purchasing dynamics, as these indicators may become key signals for predicting Bitcoin's price trends.
CryptoQuant is optimistic about Bitcoin having more upside potential.
Regarding the recent fluctuations in Bitcoin, CryptoQuant recently released a report stating that the recent pullback is merely a temporary setback encountered on the way to breaking the $100,000 barrier. Ultimately, Bitcoin is expected to surpass $100,000, and for Bitcoin's peak valuation in this bull market, CryptoQuant believes it will reach at least a target of $147,000.
