According to Matt Weller, a research head at Forex.com, the supply of Bitcoin (BTC) has become more limited as the amount of Bitcoin available on cryptocurrency exchanges has dropped to its lowest level in five years. This could potentially cause a “supply shock” for the asset. Data from Glassnode shows that the number of Bitcoin available on exchanges has decreased by 2.3 million, reaching its lowest point since April 2018. In comparison, there are approximately 3 million Bitcoin that have not been moved in the past ten years. This is significant considering the current overall supply of 19.5 million and the maximum supply of 21 million Bitcoin.
Weller suggests that this limited supply could lead to a significant increase in Bitcoin prices with even a small increase in demand. He also mentions that the introduction of spot ETFs (exchange-traded funds) could have a major impact on the supply and demand dynamics of Bitcoin, as it would make it more accessible to a new group of investors. This is especially relevant now that Bitcoin has regained its status as an “uncorrelated asset” and has decoupled from the performance of traditional stocks.
Weller believes that if large funds start allocating even a small portion of their investments to Bitcoin based on its potential as an uncorrelated asset, it could have a very positive effect on the price of Bitcoin and the entire cryptocurrency market.
Source: Bitcoin Spot ETFs Could See Inflows of $14.4B in First Year, Galaxy Says
