Towards a Bitcoin supply crisis?

As the winds of Bitcoin’s (BTC) upward momentum revival continue to bring joy, already new interesting developments are emerging. According to some experts, we are heading straight towards a supply break in the leading cryptocurrency. A possibility that could have significant consequences on the broader crypto market.

Anticipation of a Bitcoin Supply Disruption Within a Year

Bitcoin is heading towards an unprecedented supply crisis. This is what experts are predicting by announcing a radical shift in supply dynamics over the next year.

Indeed, in a recent analysis, CryptoQuant reveals a disturbing trend called “seller-side liquidity crisis”. This shows that Bitcoin is quickly approaching a point where demand will exceed available supply.

According to analysts, a surge in bitcoin demand partly fueled by the introduction of Bitcoin spot ETFs has intensified this crisis. This has resulted in the drop of the stock of liquid bitcoins available to its lowest level in terms of months of demand.

The situation is such that the current stock of bitcoins on the seller side can only support the growth at the current rate of demand for twelve months. This period drops to six months when excluding bitcoins held in exchanges outside of the United States.

The Awakening of the “Old Supply”

The urgency of the situation is compounded by the movement of previously dormant bitcoins. According to Ki Young Ju, CEO of CryptoQuant, there is an “awakening” of the old supply. A mobilization situation of bitcoins that have been held for a long time in response to the liquidity crisis.

Speaking on the matter, Ki Young Ju already predicts the imminence of a tightening in the supply of ETFs within six months from mid-March. A forecast that comes as inflows into ETFs reach record levels.  

The convergence of these factors highlights the shortage of supply that threatens the flagship crypto. As demand continues to rise, due to institutional interest and the proliferation of Bitcoin ETFs, the pressure on the available supply is intensifying.

Fundamentally, this seller-side liquidity crisis represents a pivotal moment for Bitcoin. This is because it has profound implications for the dynamics of its price and the stability of the market. It is not unlikely that in the next 12 months, we could witness an increased volatility of Bitcoin marked by record surges in the asset’s valuation.