Bitcoin experiences its first movement in a decade due to a ‘sell-side liquidity crisis’

Bitcoin (BTC) is running out of time as demand is set to surpass supply, according to new research. In its latest report, on-chain analytics platform CryptoQuant highlighted an emerging “sell-side liquidity crisis.” Bitcoin’s demand has surged this year, partly due to the introduction of spot Bitcoin exchange-traded funds (ETFs) in the United States. This increased demand, combined with declining sell-side liquidity, has resulted in Bitcoin’s liquid inventory reaching an all-time low in terms of months of demand. The report suggests that supply dynamics may change permanently by the first quarter of 2025. The analysis only takes into account accumulating addresses, which are those without outbound transactions, indicating that net demand could be even higher. When assessing BTC available strictly on US exchanges, the supply can only meet demand for half the time. Additionally, CryptoQuant CEO Ki Young Ju noted that coins mined in 2010, which have been dormant, have started moving to newly created wallet addresses. This sell-side liquidity crisis is “waking up” old supply. Despite initial predictions of a supply squeeze due to ETF inflows, there have been consecutive net outflows in recent weeks. However, the latest data from UK-based investment firm Farside shows a reversal in this trend, with net inflows of $400 million on March 25, the highest in two weeks. As always, readers should conduct their own research and exercise caution when making investment decisions.