Bitcoin Exchange Supply to Evaporate in Nine Months Amidst ETF Boom and Halving Crunch

Amidst post-halving supply dynamics, Bitcoin exchange reserves are projected to be depleted within nine months due to demand from US-based ETFs. Data suggests that as inflows continue, exchange reserves face a daily outflow of around 7,142 BTC, potentially leading to the exhaustion of remaining reserves.

Bitcoin Supply on Exchanges to Vanish in Nine Months Amidst ETF Surge and Halving Crunch

The impending Bitcoin halving, scheduled for this week, is poised to exacerbate a dwindling supply of the cryptocurrency on centralized exchanges, according to a report by Bybit released on April 15. With the halving reducing new coin issuance by 50%, and assuming continued demand from United States Bitcoin exchange-traded funds (ETFs), the report projects that exchange reserves will be depleted within just nine months.

"Bitcoin reserves in all centralized exchanges have been depleting faster," the report states. "With only 2 million Bitcoins left, if we assume a daily inflow of $500 million to Bitcoin Spot ETFs, the equivalent of around 7,142 bitcoins will leave exchange reserves daily, suggesting that it will only take nine months to consume all of the remaining reserves."

Data from CryptoQuant confirms this trend, indicating that Bitcoin reserves on centralized exchanges fell to a near three-year low of 1.94 million BTC on April 16.

Wider Market Slump Amidst Anticipated Post-Halving Price Surge

The report comes amidst a broader market downturn, with Bitcoin experiencing a price drop of over 10% during the past week, reaching $62,924 at 1:36 pm UTC, as per CoinMarketCap data.

Despite this temporary setback, Bybit, the world's third-largest exchange, anticipates that Bitcoin prices will rebound from the current correction. The report suggests that the supply squeeze resulting from the halving could propel the price to新たな new record highs.

Institutional Interest in Bitcoin ETF Continues to Rise

Weekly inflows to spot Bitcoin ETFs have decelerated since March, with last week witnessing net inflows of $199 million into the funds, down from $2.58 billion during the week beginning March 11, according to Dune Analytics data.

Despite this recent dip, spot Bitcoin ETFs have accumulated over 841,000 BTC, worth $52.9 billion, with net inflows exceeding $12.7 billion since their inception, as per Dune Analytics statistics.

Bitcoin Investor Allocation Reaches New Heights

Institutional investors are demonstrating growing interest in Bitcoin, allocating an average of 40% of their total assets to BTC, while retail investors allocate an average of 24%, according to Bybit's asset allocation report from February 24.

Bybit highlights the increasing exposure to Bitcoin via ETFs and proxy stocks like MicroStrategy by both crypto-native firms and traditional institutions. The exchange anticipates further institutional adoption in the future.

"We believe that not all institutions have been able to gain exposure since the approval of Bitcoin Spot ETFs in January 2024, as their investment mandates restrict them from investing in new products that have been in the market for only a few months," the report notes.

Halving Expected to Enhance Bitcoin Mining Sustainability

In related news, a separate report predicts that the Bitcoin halving will contribute to more sustainable Bitcoin mining practices. By reducing the reward for miners, the halving is expected to incentivize the use of greener energy sources and technological advancements to maintain profitability.