Bitcoin (BTC) may witness a supply shock as spot Bitcoin ETFs continue to heavily accumulate all circulating BTC tokens.
The newly launched spot Bitcoin ETFs remain one of the biggest catalysts driving Bitcoin’s price rally. Since their approval in January, the ETFs have accumulated over 4% of all the bitcoins in circulation, with over $9.37 billion invested.
On March 7, the most recent trading day, the ETFs attracted a net inflow of $472.6 million. BlackRock’s Bitcoin ETF alone received 12,600 BTC, bringing its total holdings to 183,300 BTC ($12.3 billion). The latest inflow marked a new record for BackRock.
Blackrock received its highest EVER one-day on-chain inflow on Wednesday this week.
+12.6K BTC ($842M)
They now hold 183.3K BTC ($12.3B) pic.twitter.com/qM7UsTTcZk
— Arkham (@ArkhamIntel) March 8, 2024
While there is no clear way to determine when the inflows could start declining, market participants are bracing up for a supply shock scenario. This refers to a situation where market demand vastly outpaces the supply, resulting in a massive increase in the price of an asset.
Bitcoin Halving Boosts Chances of BTC Supply Shock
In the case of Bitcoin, such a supply shock looks inevitable, especially with the Bitcoin halving cut now around six weeks away. On track for April 20, 2024, the halving will lower the number of newly released coins per block from 6.25 BTC to 3.125 BTC.
This will eventually decrease the number of BTC available for the market. Also, while the effects of the Bitcoin halving typically take a few months to kick in, the landmark event has historically resulted in prices surging to new highs within the next 12 months.
The spot Bitcoin ETFs have helped the BTC set a new record of beating its previous all-time high before a halving. If that trend continues, the likelihood of a strong supply shock increases.
Much speculation remains about how high prices will go in the event of a BTC supply shock. However, the general consensus is that the asset may enter the six-figure price range, breaking the $100,000 mark for the first time in its history.
Meanwhile, Bitcoin trades at around $68,500, edging closer to its recently set all-time high. The cryptocurrency’s market cap now sits well above $1.3 trillion, giving it 51.7% of the global crypto market cap.
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