Bitcoin ETF demand surges, outstripping supply by 600%

Demand for U.S. spot Bitcoin ETFs surged significantly on Tuesday, outpacing the new supply miners generate each day by 614%, according to Gayatri Choudry, quantitative research analyst at Bitwise Asset Management.

US BTC ETF demand exceeds new BTC supply by 7x. pic.twitter.com/OCU5D19rpf

— Gayatri (@GayatriPC_) March 27, 2024

The surge in demand for Bitcoin ETFs reflects growing interest from institutional and retail investors in gaining exposure to the digital asset without directly managing BTC. ETFs provide a convenient, regulated way for investors to participate in the potential upside of Bitcoin price movements while mitigating some of the risks associated with direct ownership and custody.

The Bitcoin halving, scheduled to take place within a month, will reduce the block reward from 6.25 BTC to 3.125 BTC. This event is significant in that it halves the rate at which new Bitcoins are created, making BTC more scarce over time. As demand for Bitcoin ETFs continues to grow and outpace new supply, there is an acute shortage of available Bitcoin on the market.

The combination of increased demand for Bitcoin ETFs and the impending Bitcoin halving has been the catalyst for a surge in Bitcoin prices this year, with BTC currently up more than 55% year-to-date as of this writing. BTC is up more than 173% since BlackRock initially filed its application for a spot Bitcoin ETF with the U.S. Securities and Exchange Commission.

Market participants continue to watch how Bitcoin will react to the upcoming halving. This is because this is the first market cycle in which the Bitcoin price reached an all-time high before the halving. Historically, it took several months for a ‘supply shock’ to start pushing Bitcoin prices higher following a halving. But now, with demand for spot Bitcoin ETFs growing endlessly, Bitcoin has already experienced a major supply shock, and the new supply of BTC per day is set to be cut in half.