Bitcoin Liquid Supply Drops 30% as Demand Grows, Sygnum Reports

Bitcoin's trading supply has decreased significantly, potentially driving prices higher if demand remains strong. The liquid supply of Bitcoin fell by 30% over the past 18 months, with around 1 million BTC exiting exchanges, representing 5% of total supply.

Key Points

Exchange balances dropped by about 1 million BTC since late 2023.
Coins often move to cold storage or long-term funds, limiting availability.
Fewer coins on exchanges can lead to increased price volatility.

Three US states have enacted laws to include Bitcoin in their reserves. New Hampshire has already passed its bill, while Texas and another state are in progress. Internationally, Pakistan is considering Bitcoin reserves, and the UK's Reform Party plans to explore a similar approach.

Institutional Interest

State purchases of Bitcoin signal confidence in its value.
Increased demand from public institutions may drive further buying.

Growing uncertainty regarding the US dollar and rising debt levels has led investors to see Bitcoin as a hedge. Increased interest in Bitcoin has been observed during Treasury price declines since mid-2022, with larger upward movements compared to downward shifts.

Ethereum Developments

Ethereum is gaining momentum following the Pectra upgrade, leading to increased transaction fees and institutional interest in tokenization on its platforms. This renewed activity may positively impact Bitcoin demand as well.