According to a recent report, Bitcoin's liquid supply has decreased by more than 30% in the last year and a half, signaling important signs for the future of the cryptocurrency. This article highlights Bitcoin's decreasing supply, its causes, and its possible implications.
Decrease in liquid supply of bitcoin:
According to a recent report by Sygnum, the liquid supply of Bitcoin, i.e. Bitcoin that is readily available for sale on exchanges, has decreased by more than 30% in the last 18 months. Liquid supply refers to Bitcoins that are present on exchanges for short-term trading, and not stored in hardware wallets or secure custody for long periods of time. This decrease is an indication that investors are now adopting a strategy of holding Bitcoin for the long term.
The main reasons for the shortage
Demand for ETFs: The launch of Bitcoin ETFs (exchange-traded funds) in the US and globally has led to large amounts of Bitcoin being locked up for the long term. These ETFs hold Bitcoin as long-term holdings, reducing the amount of Bitcoin available on exchanges.
Corporate purchases: Companies like MicroStrategy (now Strategy) and other corporates are adding bitcoin to their treasury as a store of value. Many companies in Japan and the US are also taking steps in this direction.
Geopolitical and financial uncertainties: The US-China trade war, the Russia-Ukraine conflict, and uncertainty in global financial policies (such as interest rates and money printing) have made Bitcoin popular as a safe hedge. The decentralized nature of Bitcoin makes it not dependent on the economy of any one country.
Long-term holding: Many investors are now looking at Bitcoin as a long-term store of value rather than for short-term gains, further reducing the amount of Bitcoin available on exchanges.
potential impact
Price surge: According to Sygnum's report, Bitcoin may experience demand shocks due to a decrease in supply, which can lead to a huge increase in its price. If demand increases and available Bitcoins are low, prices can go up rapidly.
Increase in volatility: Bitcoin's upside volatility has been higher than its downside volatility. Bitcoin's performance over the past year and a half is proof that it rises faster and falls less.
Impact on Altcoins: As Bitcoin's dominance increases, wealth may gradually shift to altcoins (e.g. Ethereum, Solana), leading to a 5x to 10x increase in altcoins.
Bitcoin chart analysis
In recent days, Bitcoin tried to break the 116,500-117,000 level but retracement was seen. If it breaks its support zone (113,000-114,000), it may fall to 110,000-112,000. On the other hand, if it remains stable after breaking the 116,000-117,000 level, it may go up to 120,000 and reach new all-time highs.
Ethereum's rising performance
Sygnum also mentioned that Ethereum has shown strong momentum and stability after the recent Pera upgrade. Ethereum's revenue growth with this upgrade has attracted large financial institutions to build tokenized platforms on its layer-2. This is helping Ethereum to emerge as a strong alternative to Bitcoin.
future prospects
Bitcoin Price: Some experts believe that Bitcoin could reach $1 million, $5 million, or even more in the next 10 years, while some even fear it could fall to zero. This will depend on how the demand and acceptance of Bitcoin grows globally.
State-level demand: Three US states have approved the adoption of Bitcoin as a reserve asset, which could further increase the demand.
Supply Crunch: Taking into account Satoshi Nakamoto’s 1 million Bitcoins and the 3-5 million permanently lost Bitcoins, the available supply of 21 million Bitcoins in total is decreasing further.
conclusion :
Bitcoin's decreasing liquid supply, growing institutional demand, and geopolitical uncertainties are making it an attractive store of value. The trend of ETFs, corporate purchases, and long-term holding has limited Bitcoin's availability, making it more likely that its price will surge in the future. Ethereum is also in a strong position with its recent upgrade. It's time for investors to understand this emerging trend and adjust their investment decisions accordingly. Bitcoin's future is both exciting and uncertain, but its impact is hard to ignore.#bitcoin #BTC #cryptooinsigts
