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Bitcoin halving and spot ETFs: the impending BTC supply shock

Bitcoinist

Bitcoin News / Bitcoinist 14 Views

Major asset managers have finally secured SEC approval for spot Bitcoin exchange-traded funds (ETFs), unleashing powerful new demand from institutional investors. Yet at the same time, Bitcoin’s already decreasing supply is set to plunge further with its quadrennial halving just months away. This burgeoning imbalance threatens to ignite Bitcoin’s next bull run.

ETFs swallow up daily Bitcoin supply

In their first month of operation, several high-profile spot Bitcoin ETFs have aggressively accumulated BTC holdings. BlackRock’s spot ETF has amassed over 78,000 BTC worth nearly $3 billion. At its current pace, Fidelity’s ETF holds 66,000 BTC and counting.

Across the slate of approved funds, over 192,000 BTC has already been swallowed up. This represents 0.89% of Bitcoin’s total circulating supply, a staggering figure when considering these ETFs have only been trading several weeks.

To put this buying spree in context, 900 new BTC are issued per day through mining rewards. Yet ETFs are currently gobbling up over 6 times this amount daily. They are buying BTC at a clip that massively outpaces new coins entering circulation.  

Halving will exacerbate Bitcoin shortage

This glaring supply-demand imbalance is poised to worsen substantially in April when Bitcoin’s next halving strikes. This recurring event cuts the block rewards paid to miners in half, drastically reducing the new BTC supply.  

Post-halving, only 450 BTC will be unlocked per day yet institutional demand is scaling exponentially higher. The Bitcoin secured across ETFs will soon eclipse supply from miners entirely. Price fireworks could ensue as buyers chasing limited coins bid up the market.  

Previous halvings have preceded Bitcoin’s most spectacular Crypto bull rallies. But this will be the first halving since SEC-approved spot ETFs democratised access for pension funds, insurers, hedge funds and more. An investing frenzy could unfold as mainstream dollars pour into scarce BTC.

FOMO may drive parabolic rally

Media hype around the tightening Bitcoin supply and institutional adoption may entice waves of new individual buyers. Fear of missing out has historically emerged near halvings, pushing prices to euphoric peaks.

BTC remains around 35% below its all-time high. As the influx of new coins grinds lower post-halving while demand accelerates, conditions seem ripe for a supply shock to catalyse Bitcoin’s next mania phase where it reclaims its former highs.  

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As spot BTC ETFs clash with Bitcoin’s deepening supply crunch in 2024, the stage seems set for an explosive move. PrimeXBT gives traders the tools to surgically extract profits whether markets swing up or down.


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