The bitcoin community is currently abuzz with discussions about an impending supply shock, a market phenomenon where demand exceeds supply, which could lead to a substantial price increase. Indicators from various sectors within the market are currently converging, suggesting that such an event may be closer than many anticipate. Here's an in-depth analysis of three signs of an impending supply shock:
bitcoin ETFs have created exceptionally large demand since their launch. Initially, this surge in demand was tempered somewhat due to significant outflows from the Grayscale bitcoin ETF (GBTC). However, the 13th day of bitcoin ETFs once again showed that Grayscale outflows are slowly slowing (yesterday: $220.7 million, previously $191.7 million), while in the two Last trading days saw net inflows to all ETF issuers of around $250 million.
Dan Ripoll, CEO of Swan, provided a detailed description analysis about the magnitude of this. “bitcoin spot ETFs have already gained 150,500 btc in just 13 days of trading. They are buying at a rate of 12,000 btc per day. Now, LET'S KISS (keep it simple and stupid). Only 900 btc are issued per day. btc is purchased at a daily issuance rate of 13 times. In 3 months, issuance will be halved, bringing the supply-demand imbalance to a staggering 26 times daily issuance!
Additionally, Alessandro Ottaviani, a respected bitcoin analyst, underlined the potential market shift, stating: “Now that bitcoin ETF inflows will always be greater than Grayscale outflows, the only way to meet that demand will be through a price increase. Once we reach $60k and even more after the new ATH, institutional FOMO will officially kick in and it will be something that humans have never experienced.”
WhalePanda, a renowned crypto analyst, highlighted the recent activities, adding credibility to the brewing supply shock: “Yesterday, another net inflow of ~$250 million into bitcoin and Blackrock ETFs generated a solid $300 million on its own.” only. “Two days of $250 million inflow, the price didn't go up much yesterday, but a couple of days like this, you'll see what kind of supply shock this will have on btc.”
Despite a substantial flow of coins from miners' wallets to spot exchanges, the market has shown remarkable resilience. According to a report from Cryptoquanto:
“Yesterday, the flow of coins in miners' wallets going to spot exchanges recorded the highest value since May 16, 2023. In total, more than 4,000 Bitcoins flowed to spot exchanges, around $173 million in circulation pressure. sale. However, this selling pressure was quietly absorbed by the market.”
It is crucial to note that despite these interactions, reserves in mining portfolios have remained constant since early January, indicating that the market has effectively absorbed the selling pressure without significant price depreciation.
The aggregate market capitalization of the stablecoin serves as a precursor to possible market movements. Recently, the aggregate market capitalization of stablecoins has shown a significant rebound, rising from a low of $119.5 billion in mid-October 2023 to nearly $130 billion.
This increase in stablecoin reserves is often interpreted as “dry powder,” ready to be deployed into assets like bitcoin, which could further accelerate supply and demand mechanics. Alex Svanevik, founder of on-chain analytics platform Nansen, commented on the correlation between stablecoin reserves and the price of btc: “When stablecoins on exchanges peaked, the price of btc peaked.” .
Stablecoins Aggregate Market Capitalization | Source: X @WClementeIII
At the time of publication, btc was trading at $42,848.
Featured image created with DALL·E, chart from TradingView.com
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