The Bitcoin supply has decreased by almost 40% in the past four years.
The approval of the spot Bitcoin ETF significantly propels recent transactions.
Before the impending halving event, miners reposition themselves.
A substantial surge in market sentiment has been generated by the inflow of Bitcoin (BTC) over the past two quarters, which has led to heightened activity surrounding the leading cryptocurrency.
CryptoQuant, the cryptocurrency analytics firm, has documented a four-year decline in Bitcoin supply on exchanges through new on-chain data. Users have held a nearly 40% decrease in BTC since 2020, which signifies an increase in favorable momentum.
Moving assets away from exchanges has historically indicated an optimistic market sentiment, whereas an influx of assets into exchanges indicates a bearish market sentiment.
Since 2020, investors have increasingly bought and held more Bitcoin than miners have produced. The prevailing trend indicates that assets listed on exchanges are more likely to be sold compared to those held by other custodians or miner reserves. This dynamic underscores the scarcity of Bitcoin, enhancing its perceived value, as commonly understood. According to the new trend, a significant increase in supply towards the conclusion of the cycle is unlikely.
Several analysts have predicted a supply disruption as the exchange-traded Bitcoin supply falls to its lowest level in five years. In the past decade, an estimated three million assets have remained unmoved, while the exchange supply currently stands at 2.3 million tokens, as reported by Glassnode.
Bullish Impulse Generated by Bitcoin ETFs
On January 10, the United States Securities and Exchange Commission (SEC) authorized spot Bitcoin ETFs, which continue to be the primary catalyst for the market upswing. The sanction opened a new investment window for traditional finance participants to increase their BTC exposure.
Assets Under Management (AUM) have surpassed $96.6 billion, while inflows into crypto investment products have exceeded $13 billion as of press time. With an aggregate value of $76 billion, BTC products have generated $12.8 billion year-to-date (YTD).
Weekly investment fund inflows of $2.8 billion, as reported by CoinShares, indicate a sustained favorable trend in Bitcoin, notwithstanding minor declines observed in recent days.
Cryptocurrency analysts Cite the approaching halving of Bitcoin as an additional factor influencing the favorable outlook, according to analysts at CryptoQuant. As miners prepare for a new reward price for the following four years, the halving, generally regarded as bullish, will occur in the coming days.
After reaching all-time lows, commentators advised miners to transfer more than $1 billion in Bitcoin to exchanges in January. As opposed to a deliberate sale preceding the halving event, some hypothesized that the miners’ transfer to exchanges could be a capacity-enhancing hedging maneuver.
