- Bitcoin reserves hit three-year low, signalling a tight market supply.
- Institutional buyers amplify demand, with $2 billion invested in May.
- Halving in April cut Bitcoin mining reward, reducing new supply.
Bitcoin exchange reserve, a measure of how much of digital currency is available for trading across exchanges, has hit a three-year low. According to data from CryptoQuant, there has been a decline in the available Bitcoin that depicts that the supply is getting constrained and may influence the market.
Shifting Balances and Market Effects
As of June 19, 2024, only 2,825,703 Bitcoin remain on exchanges. This figure has seen a notable decline from January’s balance of 3,039,000. The dwindling reserves are indicative of low selling pressure and hint at possible supply shocks, especially as institutional investors ramp up their Bitcoin holdings.
Moreover, the recent approval of Bitcoin ETFs in the United States has intensified the demand. BlackRock’s iShares Bitcoin Trust alone now holds approximately 274,000 Bitcoin.
The reduced availability on exchanges is becoming a crucial factor as it coincides with significant institutional inflows into cryptocurrency funds. May 2024 saw $2 billion flow into digital asset funds, with a substantial portion directed towards Bitcoin. Consequently, the total global holding in Bitcoin investment vehicles has reached nearly $73 billion.
Institutional Influence and Market Trends
Despite these substantial inflows, the market experienced a notable outflow in mid-June, with Bitcoin investment vehicles shedding $621 million. This outflow, the largest since late March, was largely attributed to cautious investor sentiment following hawkish signals from the Federal Reserve regarding interest rates.
However, industry leaders like Franklin Templeton CEO Jenny Johnson suggest that institutional engagement is just beginning. Johnson predicts a more substantial wave of institutional investment on the horizon, which could further strain Bitcoin’s already limited exchange supply.
Also, the supply of Bitcoin is expected to become even scarcer after the halving that took place in April 2024. This event cut the mining reward from 6.25 to 3.125 Bitcoin per block which in turn slowed down the issuance of new Bitcoin into the market.
This evolving situation presents a complex interplay of reduced supply and increased demand, shaping a pivotal period in the cryptocurrency market.
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The post Bitcoin Exchange Reserves Plunge to Lowest Level in Three Years appeared first on Crypto News Land.
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