The post Bitcoin Supply Reaches Historic Low Ahead of Spot ETF Approval appeared first on Coinpedia Fintech News
According to data analyzed by cryptocurrency experts, the amount of bitcoin held across all cryptocurrency exchanges has reached an all-time low. This scarcity of available bitcoin supply comes when anticipation is high for the approval of bitcoin-based exchange-traded funds (ETFs) by U.S. regulators.
The shrinking supply could drive up bitcoin prices according to the law of supply and demand. When demand rises while supply falls, prices typically increase as buyers compete for limited quantities of an asset. Crypto YouTube channel CryptoBusy explained this dynamic: “When demand is high and supply is low, prices tend to rise. Buyers pay more to acquire scarce assets.”
Bitcoin ETF approval could spike demand
SEC approval for a spot bitcoin ETF would likely increase demand and decrease already limited supply. Spot bitcoin ETFs are valued 1:1 to the actual bitcoin held by the ETF provider. This means firms looking to launch bitcoin ETFs need to purchase the cryptocurrency to back the shares. Major ETF providers like iShares and Ark Invest could buy millions in bitcoin from exchanges like Coinbase.
CryptoBusy said, “if firms like Ishares and Ark Invest buy $1 million of bitcoin from their elected exchange, which is Coinbase, they need actual bitcoin to back the ETF shares.” This ETF-driven demand would further strain the declining supply available on exchanges.
Adding to the supply scarcity is the upcoming bitcoin halving expected in approximately 157 days. The programmed halving of bitcoin rewards paid to miners has historically catalyzed massive bull runs in the cryptocurrency. Past halvings led to price increases of +7,745% in 2013, +460% in 2017, and +670% in 2021.
CryptoBusy noted, “Historically, BTC prices surged dramatically 12 months after each halving… And the market is already expecting a pump every after halving!” With the next halving imminent, buyers seem to be stockpiling bitcoin in anticipation of post-halving price rises.
Some experts posit that the shrinking exchange reserves and the upcoming halving could generate the “perfect storm” for increasing bitcoin value. Rather than sell to meet this growing demand, proponents advise holding Bitcoin to benefit from the expected gains.
As CryptoBusy said, “So now, will you sell your Bitcoin to the whales or HODL it for generational wealth?” For bitcoin believers, the choice seems clear: hold on tightly and wait for lift-off.