Key Insights:
- Bitcoin’s liquid supply has seen a 30% decrease over the past 18 months, possibly leading to heightened price volatility.
- Increased ETF inflows and rising interest from governments regarding Bitcoin reserves are sparking potential demand surges.
- Amidst the turmoil in U.S. Treasuries and a weak dollar, Bitcoin is becoming more attractive as a safe haven with emerging geopolitical demand drivers.
Bitcoin’s circulating supply currently exhibits stronger constraints with a 30% reduction in liquid BTC in the past year and a half, suggesting a scenario ripe for future volatility, according to a recent report from Sygnum Bank.
“Bitcoin’s liquid supply is getting severely constrained while positive demand trends continue, creating the foundation for upside shocks in the price.”
Translation: Bitcoin’s available supply is diminishing while demand grows, setting the stage for potential price spikes.
Since late 2023, over a million BTC has been withdrawn from exchanges, driven by corporate treasuries and ETF investments. This trend has stressed traders who require liquidity in times of market fluctuations.
In the meantime, Bitcoin is perceived as a secure asset amid instability in U.S. Treasuries and the decline of the dollar.
Sygnum points out that the decrease in U.S. Treasury prices and increasing federal debt may redirect investors back towards assets like gold and Bitcoin, indicating growing resilience against economic challenges.
