The highly anticipated Bitcoin halving event is expected to create significant opportunities for the supply of Bitcoin on cryptocurrency exchanges, leading to a scarcity of the digital currency. According to a report by Bybit, exchange reserves could be depleted within nine months due to a 50% reduction in Bitcoin supply issuance and increasing demand for ETFs in the United States.
Data indicates a decline in reserves of 1.94 million BTC on centralized exchanges, the lowest level in the past three years as of April 16. The limited supply of Bitcoin could result in price fluctuations.
This development comes amidst a broader market downturn, with Bitcoin’s price falling by over 10% in the past week to $62,924, according to CoinMarketCap.
Both institutional and retail investors are increasing their allocation of Bitcoin. While the recent price drop may suggest a potential increase before or after the halving event, the report suggests that the price may reach a new record high. Bybit, the third-largest exchange globally, anticipates a surge in price due to supply tightening after the halving.
The analysis also highlights the growing involvement of institutional and retail investors in Bitcoin, noting that the number of Bitcoin holders has been higher than usual since the beginning of the year. Institutional investors currently hold an average of 40% of their overall assets in cryptocurrencies, while retail investors hold 24% of their crypto assets.
Inflows to Bitcoin spot ETFs have been slowing down, including investments in proxy stocks like MicroStrategy, which provide exposure to cryptocurrencies. The report reveals a similar trend, with both crypto-native and traditional enterprises gaining influence through these channels. The introduction of new funds in spot Bitcoin ETFs is expected to maintain a cautious approach, reducing the inflow rate.
Although the market enthusiasm for Bitcoin ETFs remains high, the weekly flows into these products have steadily decreased since March. Last week, net inflows fell to $199.1 million compared to the previous week’s $2.58 billion, which marked the highest levels according to the Dune Analytics report.
Despite the recent decline in ETF interest, spot Bitcoin ETFs have accumulated over 841,000 BTC, equivalent to $52.9 billion, with a net inflow of $12.7 billion since their launch.
