The current situation in the bitcoin market is marked by accelerated demand growth and reduced supply. On-chain data analysis shows a clear supply shortage.
Bitcoin Demand Outpaces Supply
Since late September, bitcoin's apparent demand has been expanding by 228,000 BTC per month, while the amount of BTC available for sale across crypto exchanges, OTC desks, miners, and the Grayscale Bitcoin Trust (GBTC) has declined to levels not seen since October 2020. The balance of BTC accumulator addresses, which refer to investors who buy BTC and have never sold any, is expanding at a record high rate of 495,000 BTC monthly.
Sell-side Liquidity Returns to 2020 Levels
The total market cap of USD-based stablecoins recently crossed $200 billion for the first time, reflecting an influx of liquidity and fresh money in the crypto market. This coincided with BTC rallying above $100,000 to $108,000.
Rising Demand Reduces Sell-side Liquidity
Bitcoin sell-side liquidity now hovers around 3.397 million BTC, the lowest level in over four years. The liquidity inventory ratio has fallen to 6.6 months from 41 months recorded at the beginning of October, aligning with the BTC rallies in the first and fourth quarters of 2024.
The growing demand for bitcoin continues to pressure reserves, likely maintaining its value at a high level.