Exchanges expected to run out of Bitcoin after 9 months of halving – Bybit Report
A recent analysis by cryptocurrency exchange Bybit has sounded the alarm that there could be a shortage of Bitcoin (BTC) on exchanges by the end of 2024 if demand remains at similar levels.
The report predicts that if current withdrawal rates (currently around 7000 BTC per day) continue, reserves could be completely depleted within the next nine months. Shortage predictions are closely tied to the halving event expected in 2024, which will cut the amount of Bitcoin produced in each block by half.
Alex Greene, Principal Analyst at Blockchain Insights, said:
“Markets are bracing for a liquidity crisis due to the rapid depletion of Bitcoin reserves. “As reserves dwindle, the market’s ability to absorb large sell orders without affecting prices is weakened.”
ETF demand
According to a report by Bybit, institutional investors have significantly increased their Bitcoin investments following the recent approval of spot Bitcoin ETFs by U.S. regulators, increasing demand amid falling supply.
Greene noted:
“The surge in institutional interest has led to steady and rapid growth in demand for Bitcoin. “This increase will likely exacerbate shortages and push prices higher following the halving.”
The Newborn Nine ETF has been purchasing BTC at a rate of about $500 million per day. This translates to a withdrawal rate of approximately 7,142 BTC per day from exchange reserves.
Meanwhile, only about 2 million BTC remains in centralized exchange reserves. Bybit warned that exchange supply could disappear by early next year if demand remains high even after the halving reduces daily mining supply to 450 BTC.
Miner selling in the fall
At the next halving, mining rewards will be reduced from 6.25 bitcoins to 3.125 bitcoins per block, further limiting the supply of new bitcoins entering the market. This programmed decline mimics resource scarcity similar to precious metals and aims to control inflation and increase the value of Bitcoin.
Miners will face reduced incentives and increased production costs, which will likely reduce the frequency with which Bitcoins are sold immediately after creation. This decline in miner sales will result in a shortage of Bitcoin on public exchanges, pushing prices higher.
Cryptocurrency market strategist Maria Xu said:
“Miners are adapting to higher costs and reduced rewards. “Many companies may sell some of their reserves ahead of the halving to maintain operations, potentially temporarily increasing supply before a longer-term decline occurs after the halving.”
Bybit’s analysis shows that tightening Bitcoin supply is a critical and immediate issue with significant implications for Bitcoin pricing and investment strategies.
However, the exchange is optimistic about the coming months and believes that falling supply could intensify “FOMO” among new investors, potentially pushing the price of Bitcoin to unprecedented levels.
