Jun 20, 2024 at 09:33The amount of Bitcoin held on exchanges has fallen to a 3-year low as of June 19, 2024, indicating low selling pressure and potential for a supply shock as institutional investors continue to accumulate. According to CryptoQuant, the current Bitcoin exchange reserve stands at 2,825,703 BTC, down from around 3,039,000 BTC in January 2024. This decline in exchange balances suggests a tightening supply, making Bitcoin less available for purchase.
Influence of Bitcoin ETFs
The approval of Bitcoin ETFs in the U.S. in January 2024 has significantly impacted Bitcoin’s supply. Asset managers like BlackRock have been accumulating Bitcoin, adding to the pressure on available reserves. By June 6, BlackRock’s iShares Bitcoin Trust (IBIT) held approximately 274,000 BTC, contributing to the strain on supply. BlackRock’s ETF is one of 11 Bitcoin ETFs currently trading in the U.S.
In May 2024, digital asset funds experienced inflows of $2 billion, mainly driven by Bitcoin investment funds and products. The June 17 Coinshares Weekly Fund Flows report indicated that Bitcoin investment vehicles globally hold nearly $73 billion in Bitcoin. However, the same report noted significant outflows of $621 million for the week of June 15, 2024, marking the largest outflows since March 22, 2024. Coinshares attributed this to “more hawkish-than-expected” comments from the Federal Reserve, suggesting high interest rates and prompting a flight of capital from fixed-supply assets like Bitcoin.
Despite growing institutional interest, industry experts like Franklin Templeton CEO Jenny Johnson believe widespread institutional adoption is yet to come. Johnson told CNBC, “This is really the first wave of the early adopters, and I think the next wave is the much bigger institutions.” If her prediction holds true, continued institutional investment could further pressure the already low exchange supply in the coming months.
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Impact of the April 2024 Halving
Bitcoin’s supply has also been constrained by the halving event in April 2024, which reduced the block mining reward from 6.25 BTC to 3.125 BTC. This reduction in new Bitcoin entering the market has further tightened supply, contributing to the low exchange reserves and potential for a supply shock.
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