The upcoming Bitcoin halving is expected to cause a significant reduction in the supply of Bitcoin on cryptocurrency exchanges, with reserves running out in approximately nine months. This prediction is based on the assumption that the demand for Bitcoin from United States Bitcoin exchange-traded funds (ETFs) remains constant. According to a report by Bybit, Bitcoin reserves on centralized exchanges have already reached a three-year low of 1.94 million BTC as of April 16, as reported by CryptoQuant data.
These findings come amidst a broader market downturn, which has seen Bitcoin’s value decrease by over 10% in the past week, reaching $62,924 at 1:36 pm UTC, according to CoinMarketCap. However, Bybit, the world’s third-largest exchange, believes that Bitcoin prices will begin to recover from this correction.
Institutional interest in Bitcoin is also on the rise, with weekly inflows to spot Bitcoin ETFs slowing down since March. Last week, these ETFs saw net inflows of over $199 million, a significant decrease from the $2.58 billion seen in the week starting March 11, according to Dune Analytics. Despite this, spot Bitcoin ETFs have accumulated over 841,000 BTC, valued at $52.9 billion, with net flows of $12.7 billion since their launch, as reported by Dune.
Furthermore, Bitcoin investor allocation has increased since September 2023, with institutions now allocating an average of 40% of their total assets to BTC, while retail investors allocate an average of 24%, according to Bybit’s asset allocation report from Feb. 24. Bybit also noted that both crypto-native firms and traditional institutions are gaining more exposure to Bitcoin through ETFs or proxy stocks like MicroStrategy. The exchange expects more institutions to follow suit.
Overall, the Bitcoin halving is anticipated to lead to a more sustainable BTC mining industry, as stated in a separate report.