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Bitcoin Supply Shock Incoming? Exchanges Hold Record Low Levels as Holders Expectant

Last Updated April 10, 2024 9:22 AM
Teuta Franjkovic
Last Updated April 10, 2024 9:22 AM

Key Takeaways

  • Bitcoin exchange reserves at record low: Supply shock incoming?
  • Halving event to intensify supply squeeze.
  • Tether bolsters Bitcoin holdings.

Bitcoin’s exchange reserves have hit a new low this April, dropping below 2 million BTC, which is less than 10% of its total circulating supply.

This significant decrease in exchange reserves to 1.94 million BTC, accounting for approximately 9.8% of the total 19.67 million circulating Bitcoin, suggests a looming supply shock amid increasing demand, according to data  shared by CryptoQuant.

BTC Exchange Reserves Signal Potential Price Surge 

Since hitting a high  in July 2021 of 2.85 million BTC, Bitcoin’s exchange reserves have seen a consistent decline as investors increasingly choose to hold their Bitcoin for the long term rather than trade it.

This trend toward holding indicates a growing preference for viewing Bitcoin as a long-term investment. A supply shock, which occurs when the available supply of Bitcoin on exchanges drops sharply while demand increases, often results in price spikes due to a higher volume of buy orders relative to sell orders.

Significant withdrawals from exchanges, which reduce the available supply for trading, are a primary driver of such shocks, potentially leading to a rapid increase in Bitcoin’s price.

Bitcoin Halving Event Set to Amplify Supply Shock

The upcoming Bitcoin halving event, which reduces miner rewards by half every four years, is anticipated to significantly constrain the new supply of Bitcoin, thereby intensifying the effect of a supply shock.

Some reports underscored the gravity of the situation, noting that only 1.7 million Bitcoins remain on exchanges. This scarcity, coupled with the nearing halving event, is expected to trigger a pronounced supply shock, potentially catalyzing a substantial increase in Bitcoin prices.

This scenario highlights the delicate equilibrium between supply and demand in the cryptocurrency market, underscoring the strategic importance of holding and timing around significant market milestones like the Bitcoin halving.

Tether Expands Bitcoin Reserves

CCN has already reported how Tether has enhanced  its Bitcoin holdings, now totaling 75,354 BTC, and has recently passed the System Organization Control (SOC) 2 Type 1 audit, affirming its security compliance. This strategic accumulation positions Tether as the seventh-largest Bitcoin holder.

Additionally, an 80 million USDT transaction was detected moving from Tether Treasury to an unidentified wallet, further showcasing Tether’s active management of its reserves. This move aligns with its ongoing strategy to bolster its stablecoin reserves, marking a significant step in its operational and security advancements.
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