Is a Bitcoin supply shock imminent? CashApp reportedly ran out of Bitcoin, sparking discussions on the token’s supply and its future implications. As the dominant crypto surges to an all-time high, the much-talked-about “supply shock” has started making the rounds. Market observers are particularly sensitive to this phenomenon, given that the upcoming halving is just a month away.
A supply shock is a substantial gap between supply and demand for the world’s leading digital asset, and it is this shortage that is believed to be the driving force for the next rally. According to TradingView, Bitcoin’s availability on over-the-counter [OTC] desks has plummeted to an alarming rate, with only 40 BTC available for sale.
Experts believe this could herald a new era in BTC trading dynamics. One such observation was highlighted by Mr. Matt Hougan, the Chief Investment Officer at Bitwise, who pointed out the extreme imbalance in Bitcoin’s supply and demand profile.
Citing data from HODL15 Capital, the BTC demand is estimated to be around 30,000, with a small supply of around 6,000 BTC. This looming disparity is a clear representation of an insufficient amount of supply to meet the burgeoning demand, which is estimated to surpass the supply by 20.5% as depicted by the current market dynamics.
Wall Street Bitcoin ETFs Buying Spree: The Big Institutional Push
The massive demand has skyrocketed as institutional investors have continued to pump in more funds into the asset class. The latest data reveals that the skyrocketing inflows in the Bitcoin ETFs have been the prime suspect so far, with BlackRock’s IBIT leading the market share by a huge margin.
Wall Street behemoths that initially remained aloof to the crypto currencies have now jumped ships, amassing significant treasuries of the cryptocurrency. Notably, the Bitcoin exchange-traded funds [ETFs] in the United States now hold nearly 4% of the total supply of Bitcoin. In a recent study by BitMEX Research, spot funds collectively held 776,464 BTC [$48 billion] as of March 1. At present, there are roughly 20 million BTC [$1.2 trillion] in circulation, with the eventual limit of 21 million expected to be reached in the next century or even longer.