Towards a bitcoin supply crisis?

2:00 p.m. ▪ 4 min reading ▪ by Luc Jose A.

While the wind of the resumption of its upward momentum is still making people happy, there is already some interesting news about bitcoin (BTC). According to some experts, we are heading straight towards a breakdown in supply for the flagship crypto. A possibility which would not be without consequences on the crypto market in the broad sense of the term.

Anticipation of a disruption in the supply of bitcoin within a year

Bitcoin is reportedly heading towards an unprecedented supply crisis. This is what experts predict, announcing a radical change in supply dynamics over the next year.

Indeed, in a recent analysis, CryptoQuant reveals a worrying trend called “liquidity crisis on the sellers’ side”. The latter shows that bitcoin is quickly approaching a point where demand will exceed available supply.

According to analysts, the explosion in demand for bitcoins partly fueled by the introduction of spot Bitcoin ETFs may have intensified this crisis. This resulted in the stock of available liquid bitcoins falling to its lowest level in terms of months of demand.

The situation is such that the current stock of sell-side bitcoin liquidity can only support growth at the current rate of demand for twelve months. A deadline which falls to six months, if we exclude bitcoins held on exchanges outside the United States.

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The awakening of the “old offer”

The urgency of the situation is consolidated by the movement of previously dormant bitcoins. According to Ki Young Ju, CEO of CryptoQuant, there would be a “reawakening” of the old offer. A situation of mobilization of long-held bitcoins in response to the liquidity crisis.

Speaking on the issue, Ki Young Ju already foresees an imminent tightening of ETF supply within six months from mid-March. A projection that comes as inflows into ETFs reach record levels.

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

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

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Luc Jose A. avatarLuc Jose A. avatar
Luc Jose A.

A graduate of Sciences Po Toulouse and holder of a blockchain consultant certification issued by Alyra, I joined the Cointribune adventure in 2019. Convinced of the potential of blockchain to transform many sectors of the economy, I took the commitment to raise awareness and inform the general public about this constantly evolving ecosystem. My goal is to enable everyone to better understand blockchain and seize the opportunities it offers. I strive every day to provide an objective analysis of current events, to decipher market trends, to relay the latest technological innovations and to put into perspective the economic and societal issues of this revolution in progress.


The comments and opinions expressed in this article are those of the author alone, and should not be considered investment advice. Do your own research before making any investment decisions.

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