Bybit’s recent analysis has set off alarm bells regarding a potential shortage of Bitcoin on exchanges by the end of 2024 if the current demand trajectory is maintained. The report highlights the possibility of reserves being completely exhausted within the next nine months, with withdrawal rates currently hovering around 7000 BTC per day. This forecast is directly linked to the projected halving event in 2024, which will halve the production of Bitcoin on each block.
The report also notes that institutional investors have significantly ramped up their Bitcoin investments following recent regulatory approvals of spot Bitcoin ETFs in the US. This surge in demand from institutional players, combined with a shrinking supply, is expected to exacerbate the impending shortage and potentially drive prices even higher post-halving.
At present, only about 2 million BTC remain in centralized exchange reserves, with ETFs purchasing Bitcoin at a rate of approximately $500 million per day. This translates to a withdrawal rate of approximately 7,142 BTC daily from exchange reserves. Bybit has warned that if demand continues unabated, exchange supplies could be depleted by early next year after the halving event reduces the daily mining supply to 450 BTC.
The impending halving will slash the mining reward from 6.25 to 3.125 bitcoins per block, further limiting the new supply of bitcoins entering the market. This reduction in mining rewards aims to mimic resource scarcity, akin to precious metals, and is designed to regulate inflation and bolster Bitcoin’s value. Miners are expected to grapple with reduced incentives and higher production costs post-halving, potentially leading to a decline in immediate sales of freshly-mined bitcoins.
Bybit’s analysis underscores the critical nature of the tightening Bitcoin supply, with significant implications for pricing and investment strategies. Despite the looming shortage, the exchange remains cautiously optimistic about the future, believing that the dwindling supply could trigger a “fear of missing out” (FOMO) among new investors, propelling Bitcoin’s price to unprecedented heights in the coming months.
As the market braces for a possible liquidity crisis and shortage of available Bitcoin, stakeholders are advised to closely monitor the situation and adapt their investment strategies accordingly to navigate the volatile landscape of the cryptocurrency market.
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