Key Points
- Bitcoin reserves on exchanges could be exhausted in nine months due to the halving event’s 50% supply issuance reduction.
- Institutional interest in Bitcoin continues to rise, despite recent market volatility.
The upcoming halving event for Bitcoin (BTC), which will cut the issuance of new coins by half, could lead to a scarcity of Bitcoin on cryptocurrency exchanges within the next nine months.
This prediction is based on the assumption that the inflows from Bitcoin exchange-traded funds (ETFs) in the United States will continue at their current rate. As per a recent report by Bybit, if the daily inflow to Bitcoin Spot ETFs remains at $500 million, around 7,142 Bitcoins will be withdrawn from exchange reserves daily. This would result in the depletion of the remaining reserves in approximately nine months.
Declining Bitcoin Reserves
Data from CryptoQuant indicates that Bitcoin reserves on centralized exchanges have fallen to a nearly three-year low of 1.94 million BTC as of April 16. This development has occurred during a broader market downturn, which has seen Bitcoin’s price drop by over 10% in the past week.
Despite this, Bybit, the third-largest exchange globally, anticipates that Bitcoin prices will begin to recover from the current correction. They predict that the upcoming supply squeeze could propel Bitcoin’s price to new record highs.
Rising Institutional Interest
There has been a noticeable decrease in weekly inflows into spot Bitcoin ETFs since March. However, despite this slowdown, Bitcoin ETFs have accumulated over 841,000 BTC worth $52.9 billion, with net flows exceeding $12.7 billion since their inception.
Institutional interest in Bitcoin has been steadily increasing. As per Bybit’s asset allocation report, institutions are now allocating an average of 40% of their total assets to Bitcoin. In contrast, retail investors are allocating an average of 24% of their assets to Bitcoin.
Both crypto-native firms and traditional institutions are increasingly gaining exposure to Bitcoin, either through ETFs or proxy stocks like MicroStrategy. Bybit expects this trend to continue, with more institutions likely to invest in Bitcoin in the future.