The landscape of Bitcoin’s supply and demand is experiencing a notable transformation, driven by the introduction of spot exchange-traded funds (ETFs) in the United States and the anticipation of the upcoming Bitcoin halving. This shift has led to a significant reduction in Bitcoin holdings on exchanges, with nearly $10 billion worth of Bitcoin withdrawn since the launch of these ETFs.
The Great Withdrawal
Since January 11, 2024, more than 136,000 BTC have been moved off crypto exchanges, according to data from Glassnode, an on-chain analytics firm. This mass exodus of Bitcoin from exchanges has reduced their combined holdings to the lowest level seen since April 2018, standing at 2,320,458 BTC as of March 28. This trend is a clear signal that Bitcoin holders are not in a rush to sell, instead opting to withdraw their assets from trading platforms. Just on March 27, the exchanges experienced one of their largest daily withdrawals, with over 22,000 BTC, equivalent to $1.54 billion, being moved.
Signs of a Squeeze
The launch of U.S. spot Bitcoin ETFs has only been in effect for a few months, yet it has already facilitated the withdrawal of approximately $9.5 billion worth of BTC from major exchanges. This indicates a robust demand for Bitcoin, further emphasized by a record-setting transfer of $1.4 billion in USD Coin (USDC) to Coinbase, the largest U.S. crypto exchange. Such movements hint at potential buying pressure and a growing optimism surrounding Bitcoin’s value.
Halving Anticipation Builds
The impending Bitcoin halving is another catalyst stirring market dynamics. Expected to occur in mid-April, this event will halve the number of Bitcoins generated per block, thereby reducing the rate at which new Bitcoins are created. This halving is particularly significant, as it will render Bitcoin a scarcer asset than gold in terms of supply growth rate. Market analysts predict that this, combined with the sustained demand from ETF purchases, will lead to a supply squeeze, potentially elevating Bitcoin’s price over the next six to twelve months.
