Bitcoin (BTC) Supply Shock Unlikely in 2025 Despite ETF Outflows, CEX.IO Analysis Shows

Bitcoin BTC/USD and Ethereum ETH/USD spot ETFs faced substantial net outflows of $742 million on Jan.8. Bitcoin ETFs led the decline, recording $583 million

Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) spot exchange-traded funds faced substantial net outflows of $742 million on Wednesday.

Bitcoin ETFs led the decline, recording $583 million in outflows, with Blackrock's iShares Trust (NYSE:IBIT) Bitcoin Spot ETF, Fidelity's Wise Origin Bitcoin II ETF (NYSE:FBTC) and Ark & 21Shares' Crypto Industry Fund ETF (NYSE:ARKB) contributing $124 million, $258 million and $148 million, respectively, according to data from SoSo Value.

Among Ethereum spot ETFs, Fidelity's FETH saw $147 million in outflows, the data showed.

The outflows come as research from cryptocurrency exchange CEX.IO suggests a Bitcoin supply shock is unlikely in 2025, despite market fluctuations and ETF movements.

CEX.IO's analysis, released Wednesday, indicates that 70% of Bitcoin's circulating supply is in free float, providing ample liquidity to mitigate the risk of a supply shock.

The research highlights a 1.75 million BTC decrease in long-term holder supply in 2024, signaling potential for significant selling pressure within this group in the upcoming year.

While U.S. spot ETFs absorbed 2.4 times the annual mined supply of Bitcoin in 2024, they account for less than 4% of overall trading volume.

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This suggests that while influential, ETF trading volume is not the dominant force in the market.

The report revealed a redistribution of Bitcoin supply with exchange reserves dropping 21% while over-the-counter balances increased by 105%, and about 40% of Bitcoin's transaction volume in 2024 was exchange related.

CEX.IO also quadrupled its market share in 2024, becoming a top 2 exchange for Bitcoin market depth, with a 61% increase in USD denominated 2% market depth.

The exchange's report argues that with a substantial amount of Bitcoin held by long-term holders ready to take profits, the market will likely see continued adherence to the traditional 4-year market cycle.

This analysis suggests that despite the recent outflows in spot ETFs, these market trends mitigate the risk of a severe supply shock in 2025.

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