Bitcoin Supply Deficit and the Role of Halving: How Changes in Supply Affect the Cryptocurrency Market
Date: 2023-11-13 Author: Dima Zakharov Categories: CRYPTO PAYMENTS
Bitcoin Shortage: Causes and Market Impact
In recent days, we have witnessed a swift reduction in Bitcoin supply. The wallets of short-term investors currently hold only 2.33 million bitcoins, marking a multi-year low. This has sparked growing interest and concern within the investment community.
Glassnode experts attribute this trend to the approaching Bitcoin halving scheduled for April 2024. The halving represents a crucial moment for Bitcoin, incorporating fundamental, technical, and even philosophical aspects. Embedded in Bitcoin's code is the intentional reduction of newly minted bitcoins, ensuring the total supply never exceeds 21 million units.
As a result, the impending halving is creating a shortage in the supply of the primary cryptocurrency, reaching historical highs. This becomes a key factor shaping market trends and attracting the attention of both short-term and long-term investors.
Bitcoin Wallets: Balancing Short-term and Long-term Investor Positions
According to analysts, the current holdings of 2.33 million bitcoins in short-term investors' wallets represent real market supply. Short-term investors, typically willing to part with their coins in the near future, make this volume a significant indicator.
Despite the shortage in short-term wallets, long-term holders continue to actively accumulate bitcoins. This dynamic stimulates a decrease in market liquidity, creating higher demand for available coins. It is crucial to note that the quantity of bitcoins on exchanges has reached its lowest point since March 2020, underscoring the trend of coins leaving trading platforms.
Long-term Investors and Record Accumulations
According to Glassnode data, long-term investors accumulate over $1.35 billion in bitcoins each month. The total number of bitcoins held by long-term holders has reached a new historical high—over 14.8 million BTC, constituting approximately 76% of the circulating cryptocurrency supply.
These statistics indicate sustained interest and trust from long-term investors in the future of Bitcoin. Their active participation in the market adds an additional dynamic, influencing price trends and the overall dynamics of the cryptocurrency space.
The Bitcoin shortage, driven by the halving and the proactive actions of investors, shapes a unique market situation that requires careful observation and analysis for all participants in the cryptocurrency ecosystem.
