Nearly $10B in Bitcoin Withdrawn from Exchanges Since US Spot ETF Launch: Potential Supply Squeeze
Summary:
Since the implementation of spot exchange-traded funds (ETFs) in the U.S., cryptocurrency exchanges have seen a withdrawal of nearly $10 billion worth of Bitcoin. The trend, showing no signs of slowing, has tipped Bitcoin supply dynamics in the favor of bulls. Analysts suggest these developments may lead to a major supply "squeeze" within the next six to twelve months, with demand surpassing available Bitcoin for sale.
Since the initiation of spot exchange-traded funds (ETFs) in the U.S, almost $10 billion worth of Bitcoin (BTC) has been pulled out of cryptocurrency exchanges, reveals data gathered by on-chain analytics company Glassnode. From January 11 onwards, there has been a decrease of over 136,000 BTC in exchanges, showing no indication of cashing-in profits. The current quarter has seen a massive number of withdrawals from exchanges, tipping the BTC supply dynamics towards the bulls.
No more than three months have passed since U.S. spot Bitcoin ETFs began trading, and during this timeframe, BTC valued at approximately $9.5 billion has been removed from major trading venues. The exchanges monitored by Coinbase, as of March 28, collectively held 2,320,458 BTC, the smallest amount since April 2018.
The trend shows no sign of abating. Glassnode reports that March 27 saw withdrawals exceeding 22,000 BTC ($1.54 billion), making it the third-highest daily total in 2024. A significant transfer of USD Coin (USDC) stablecoin to Coinbase, the biggest American crypto exchange, was highlighted by J.A. Maartunn, a contributor to the on-chain analytics platform CryptoQuant, when analyzing market trends. He pointed out that this was the largest inbound transfer ever recorded. “Is there a strong buying pressure on the horizon?” he speculated, adding that $1.4B USDC was recently moved into Coinbase.
The overall effect of ETFs on BTC supply and consequently its price, is a growing area of discourse among market analysts. A major supply "squeeze" - demand surpassing BTC available for purchasing - is expected by several sources to become evident in the coming six to twelve months. The purchasing power of the ETFs already exceeds the daily volume of "new" BTC released by miners.
Post the imminent mid-April block subsidy halving event, the ratio will increase even further, with BTC supply growth limited to just 3.125 BTC per newly mined block. Charles Edwards, founder of quantitative Bitcoin and digital asset fund Capriole Investments, in his recent market commentary stated, "Bitcoin will soon surpass gold in terms of scarcity, with the upcoming most significant Halving in its history. Coupled with the anticipation of increased institutional demand through ETFs and an automated supply crunch from the Halving, Bitcoin is on the road to becoming the world's toughest asset. April has a lot to offer."
This piece does not offer investment guidance or suggestions. All investment and trading decisions carry risk, and it's advised that readers conduct thorough research before deciding.
Published At
3/29/2024 6:45:00 PM
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