Potential Bitcoin Liquidity Crisis Looms if Institutional Inflows Persist, Warns CryptoQuant CEO
Summary:
CryptoQuant's CEO Ki Young Ju foresees a potential "sell-side liquidity crisis" for Bitcoin (BTC) by September should the current trend of rising institutional inflows continue unabated. Bitcoin ETFs in the U.S. have become the most successful ETF launch in history, holding nearly $30 billion. Should this trend persist, the market could face a lack of BTC available for purchase. An exception to this trend is the Grayscale Bitcoin Trust (GBTC) which sees daily outflows of around $500 million. Ju predicts a significant impact on BTC price if a tipping point is reached due to high ETF demand.
A prominent industry analyst, Ki Young Ju, the founder and CEO of CryptoQuant, has predicted that Bitcoin (BTC) could face a stringent scarcity of sell-side liquidity, amounting to a "crisis" by September 2023, if the ongoing trend of surges in institutional inflows persists. The institutional allocation of Bitcoin, as per industry insiders, is still in its initial stages, even as the Bitcoin exchange-traded funds (ETFs) in the United States gather steam. These ETFs, now securing almost $30 billion, have made history, marking the most successful takeoff of any ETF.
Should this progress persists, they could soon be facing an unprecedented issue – an insufficiency of BTC for sale. According to Ki Young Ju, the current bearish scenario in the Bitcoin market cannot be flipped unless the inflow into Bitcoin ETFs comes to a halt. His observation comes from the fact that ETFs stored over 30,000 BTC last week alone. Considering there exist around 3 million BTC in exchange and miner wallets, the potential impact of a supply-triggered price surge becomes apparent.
Ki Young Ju points out that the uninterrupted uptrend in BTC held by "accumulation addresses" still needs to double before the so-called "crisis" kicks off. Despite hitting new record-high values young Ju indicates that the holdings in these wallets specialized in inbound transactions have started to level off.
An exception to this growing trend appears to be the Grayscale Bitcoin Trust (GBTC), which, it is noted, has been witnessing daily outflows to the tune of $500 million. WhalePanda, a well-known commentator, observes that GBTC's Bitcoin holdings, despite the massive outflows, have virtually remained stagnant courtesy of the BTC price gains since January's ETF introduction.
Ju further predicts that should the turning point arrive as a result of the ETF demand, the impact on BTC price could vastly exceed expectations due to the scarcity of sell-side liquidity paired with a thin orderbook.
However, this reporting does not offer investment advice or recommendations. Every investment or trading move constitutes a risk, and readers are therefore advised to carry out their due diligence before arriving at a decision.
Published At
3/12/2024 12:10:00 PM
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