Bitcoin Ready to Face ‘Supply Shock’ as Exchange Balance Falls to 5-Year Low, Analyst Says

Bitcoin (BTC) Supply has become increasingly tight, with foreign exchange balances falling to a five-year low and leaving the asset primed for a potential “supply shock”, Matt Weller, global head of research at said in a interview with CoinDesk TV THURSDAY.

The level of bitcoin available on crypto exchanges – liquid tokens that investors can easily buy and sell – fell by 2.3 million, its lowest level since April 2018. Glass node data watch. That’s down from 2.6 million a year ago and 3.2 million at the May 2020 peak.

Meanwhile, about 3 million tokens haven’t been moved in ten years, Weller said. This compares to current global offer of 19.5 million and the maximum Bitcoin supply of 21 million.

“This suggests a potential supply shock,” Weller said. “With lower supply in the market, it only takes a small increase in demand to push prices up at a rapid rate.”

Weller said spot ETFs, unlike futures-based products, could “fundamentally change the supply and demand situation” for bitcoin, making it accessible to a new set of investors. This is especially true now that bitcoin has regained its “uncorrelated asset” attract by decoupling from stocks and rallying as U.S. stocks enter correction territory, he added.

“If we see just a small amount of allocation from some of these big funds on this investment thesis of uncorrelated or occasionally uncorrelated assets, that could be a very bullish sign for bitcoin and the entire sphere crypto,” Weller said.


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