Bitcoin Exchange Reserve Hits 3-Year Low Amid Institutional Accumulation and Halving Impact
Summary:
The total amount of Bitcoin available in exchanges has reduced to a 3-year low as of June 19, 2024, indicating low selling pressure and potential supply shocks. The sustainability of this trend is impacted by approval of Bitcoin ETFs in the US earlier this year, which has contributed towards an accumulation of Bitcoin, particularly from asset managers like BlackRock. Despite a surge in institutional interest, Bitcoin adoption isn't in full swing, suggesting continued pressure on the supply in the future. The reduced block mining reward post-April 2024 halving event adds further strain on Bitcoin’s supply.
As per June 19, 2024, data reveals that the aggregate amount of Bitcoin remaining in exchanges has hit a 3-year low point. The figures from CryptoQuant illustrate, presently, a total of 2,825,703 Bitcoins (BTC) are up for grabs in exchanges. A significant drop from the approximate 3,039,000 BTC balance that the exchanges experienced back in January 2024. This decrease in exchange reserves, or what's commonly known as exchange balance, suggests a decline in selling pressure and a likelihood of supply shortage due to limited availability for buying.
Once the Bitcoin ETFs gained approval in the US in January 2024, the supply of Bitcoin faced extra pressure from the rapid accumulation by asset management giants like BlackRock. As of June 6, BlackRock's iShares Bitcoin Trust (IBIT) was in possession of an estimated 274,000 Bitcoins. Furthermore, the IBIT is just one among the 11 other Bitcoin ETFs trading in the US.
The monthly inflows into digital asset funds spiked to $2 billion in May 2024, predominantly fueled by the inflow into Bitcoin funds and products. The Coinshares Weekly Fund Flows report from June 17 indicates that global Bitcoin investment instruments are in control of around $73 billion worth of Bitcoin.
Nonetheless, the same report unveiled a $621 million weekly outflow from Bitcoin investment tools during the week of June 15, 2024. This marks a record since the week of March 22, 2024. According to Coinshares, this could be due to more radical viewpoints from the Federal Reserve suggesting higher interest rates, resulting in capital migration from fixed-supply assets such as Bitcoin.
Yet, despite this increased institutional interest, industry experts like Jenny Johnson, the CEO of Franklin Templeton, argue that institutional adoption hasn't fully taken off. Johnson informed her interviewer on CNBC, "What we're experiencing currently is the first wave of the early adopters, and the more significant institutions constitute the next wave." Should Johnson's forecast prove accurate, institutions will continue to channel capital into Bitcoin, creating even more demand on the already stressed supply in the forthcoming months.
Moreover, the supply of Bitcoin also fell post the April 2024 halving event, which led to a reduced block mining reward. Pre-halving, miners gathered 6.25 Bitcoin per successfully mined block. However, post the April 2024 halving, miners now receive just 3.125 Bitcoin per successfully mined block.
Published At
6/20/2024 12:59:30 AM
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