CryptoQuant data shows that Bitcoin exchange balances have reached their lowest point in three years, indicating a potential decrease in selling pressure on BTC. Additionally, as institutional investors continue to accumulate BTC through Bitcoin ETFs, there may be further potential supply shocks that could drive up the price.
Bitcoin has been experiencing continuous fluctuations and declines recently, currently holding steady at the $65,000 level and experiencing a 4.7% drop over the past week. However, data shows that Bitcoin balances on exchanges have reached a three-year low, suggesting a shift in investor sentiment towards bullishness (transferring Bitcoin to cold wallets for storage) and a potential alleviation of selling pressure on BTC.
According to CryptoQuant data as of June 19th, the exchange balance of Bitcoin (the total amount of Bitcoin available on exchanges) is now at 2,825,703 BTC, the lowest point in three years. In January of this year, Bitcoin exchange balances were hovering around 3,039,000 BTC.
As shown in the chart below, when exchange BTC balances have experienced significant declines in the past, the price has often turned upward shortly after. However, the current difference from previous times is the launch of the US spot ETF, which may also change the reference value.
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Source: CryptoQuant
Bitcoin spot ETF driving BTC supply shock
According to the Coinshares weekly fund flows report on June 17th, Bitcoin investment vehicles hold nearly $73 billion worth of Bitcoin globally. However, the same report also shows that during the week ending June 15th, the weekly outflow of Bitcoin investment vehicles was $621 million, the largest outflow since the week ending March 22nd, 2024.
Coinshares analysis points out that the Federal Reserve’s “more hawkish than expected” comments imply that the Fed will maintain higher interest rates for a longer period, leading to capital outflows from fixed supply assets such as Bitcoin.
However, experts such as Franklin Templeton CEO Jenny Johnson believe that institutional adoption of Bitcoin has not yet fully unfolded. She stated in an interview with CNBC, “This is indeed the first wave of early adopters, and I believe the next wave will be larger institutions.”
If her prediction comes true and institutional capital continues to flow into Bitcoin, coupled with the halving completed in April of this year further restricting the Bitcoin supply, it could provide further momentum for BTC’s upward movement.