Demand for spot bitcoin ETFs in the US increased significantly on Tuesday, outpacing new supply created daily by miners by a notable 614%, according to Gayatri Choudry, quantitative research analyst at Bitwise Asset Management.
Demand for US btc ETFs exceeds new btc supply by 7x pic.twitter.com/OCU5D19rpf
-Gayatri (@GayatriPC_) March 27, 2024
The rise in demand for bitcoin ETFs reflects the growing interest among institutional and retail investors in gaining exposure to the digital asset, without having to manage btc themselves. ETFs offer a convenient and regulated way for investors to participate in the potential upside of bitcoin price movements, while mitigating some of the risks associated with direct ownership and custody.
The bitcoin halving, scheduled for less than a month, will reduce the block reward from 6.25 btc to 3.125 btc. This event is important because it halves the rate at which new bitcoins are generated, making btc more scarce over time. As demand for bitcoin ETFs continues to rise and outpace new supply, available bitcoins on the market are becoming drastically scarce.
The combination of growing demand for bitcoin ETFs and the impending bitcoin halving have been the catalysts for the rise in bitcoin price this year, with btc now up over 55% year-to-date at the time of write this article. From BlackRock initially presented In its bitcoin ETF spot filing with the US Securities and Exchange Commission, btc has surged over 173%.
Market participants remain eager to see how bitcoin will react to the upcoming halving, as this is the first market cycle in bitcoin's history in which its price hit a new all-time high before the halving. . Historically, it would take a few months for the “supply shock” to drive an increase in the price of bitcoin after a halving. But now, with demand for spot bitcoin ETFs growing with no end in sight, bitcoin has already experienced a major supply shock, and new btc supply per day is about to halve.
