Exchanges expected to run out of Bitcoin 9 months after halving – Bybit report

A
recent

analysis
by
crypto
exchange

Bybit
has
sounded
the
alarm
on
a
potential
shortage
of
Bitcoin
(BTC)
on
exchanges
by
the
end
of
2024
if

demand
remains
at
similar
levels.

The
report
predicts
that
reserves
could
be
entirely
depleted
within
the
next
nine
months
if
current
withdrawal
rates
persist
—
currently
around
7000
BTC
per
day.
The
shortage
forecast
is
closely
tied
to
the
anticipated
halving
event
in
2024,
which
will
cut
the
Bitcoin
production
on
each
block
by
half.

Alex
Greene,
a
senior
analyst
at
Blockchain
Insights,
said:

“The
rapid
depletion
of
Bitcoin
reserves
is
preparing
the
market
for
a
possible
liquidity
crisis.
As
reserves
dwindle,
the
market’s
ability
to
absorb
large
sell
orders
without
impacting
the
price
weakens.”

ETF
demand

According
to
Bybit’s
report, institutional
investors
have

significantly
increased
their
Bitcoin
investments
following
recent
US
regulatory
approvals
of

spot
Bitcoin
ETFs,
driving
up
demand
against
a
backdrop
of
shrinking
supply.

Greene
noted:

“The
surge
in
institutional
interest
has
stabilized
and
drastically
increased
demand
for
Bitcoin.
This
increase
is
likely
to
exacerbate
the
shortage
and
push
prices
higher
after
the
halving.”

The

Newborn
Nine
ETFs
have
been
buying
BTC
at
a
rate
of
roughly
$500
million
per
day
—
which
translates
to
a
withdrawal
rate
of
approximately
7,142
BTC
per
day
from
exchange
reserves.

Meanwhile,
only
about
2
million
BTC
remain
in
centralized
exchange
reserves. Bybit
warned
that
exchange
supplies
could
vanish
by
early
next
year
if
the
demand
remains
at
a
high
level
after
the
halving
reduces
the
daily
mining
supply
to
450
BTC.

Miner
selling
to
fall

The
next
halving
will
cut
the
mining
reward
from
6.25
to
3.125
bitcoins
per
block,
further
limiting
the
new
supply
of
bitcoins
entering
the
market.
This
programmed
reduction
mimics
resource
scarcity,
similar
to
that
of
precious
metals,
and
aims
to
control
inflation
and
increase
Bitcoin’s
value.

Miners
will
face
reduced
incentives
and
higher
production
costs,
which
will
likely
reduce
the
frequency
of
Bitcoin
being
sold
immediately
after
generation.
This
reduction
in
miner
sales
will
contribute
to
the
scarcity
of
Bitcoin
on
public
exchanges,
further
driving
up
prices.

Maria
Xu,
a
cryptocurrency
market
strategist,
said:

“Miners
are
adjusting
to
higher
costs
and
reduced
rewards.
Many
may
sell
part
of
their
reserves
before
the
halving
to
sustain
operations,
potentially
increasing
supply
temporarily
before
a
long-term
decline
post-halving.”

Bybit’s
analysis
suggests
that
the
tightening
of
Bitcoin
supply
is
a
critical
and
immediate
concern
with
significant
implications
for
Bitcoin’s
pricing
and
investment
strategies.

However,
the
exchange
remains
optimistic
about
the
coming
months
and
believes
that
the
fall
in
supply
could
fuel
a
“fear
of
missing
out”
(FOMO)
among
new
investors
—
potentially
driving
Bitcoin’s
price
to
unprecedented
levels.

Mentioned
in
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article