A recent report by Sygnum Bank highlights the significant decline in Bitcoin's liquid supply, which may lead to price increases.
Declining Bitcoin Supply
According to Sygnum Bank, Bitcoin's liquid supply has decreased by 30% over the past 18 months due to rising institutional demand and the emergence of investment vehicles such as exchange-traded funds (ETFs). Since the beginning of 2023, these tools have withdrawn nearly one million BTC from trading platforms.
Impact of Geopolitical Factors
Current geopolitical tensions and economic instability, including the weakening of the U.S. dollar and escalating national debt, are prompting both retail and institutional investors to turn to assets like Bitcoin and gold. Meanwhile, some U.S. states are enacting laws that allow Bitcoin to be used as a reserve asset, potentially adding further momentum to this demand.
Ethereum's Revival
Ethereum (ETH) is also showing signs of revival after a prolonged period of stagnation. The report links this renewed momentum to the Pectra upgrade, which has led to revenue growth and reignited interest from financial institutions developing tokenization infrastructure on Ethereum and its layer-2 solutions.
The declining liquidity of Bitcoin and growing institutional interest create conditions for potential price increases. The adoption of cryptocurrency reserves by some states and countries may further stimulate this demand.
