Bitcoin may face a sell-side liquidity crisis by September if institutional inflows persist, according to an industry analyst. The rise of spot Bitcoin exchange-traded funds (ETFs) in the United States could lead to a shortage of BTC, affecting market dynamics.
Bitcoin (BTC) could encounter a significant "sell-side liquidity crisis" by September if institutional inflows persist, according to an industry analyst.
Discussing the matter on X, Ki Young Ju, the founder and CEO of CryptoQuant, an on-chain analytics platform, projected a crucial BTC supply watershed "within six months."
Ki: Bitcoin bears "can't succeed" amidst ongoing ETF flows
Many industry insiders believe that Bitcoin's adoption as an institutional investment is just beginning, especially with the increasing traction of United States-based spot Bitcoin exchange-traded funds (ETFs).
Having amassed nearly $30 billion, these ETFs have witnessed the most successful launch in ETF history.
If this trend persists, a scenario might emerge where the supply of BTC fails to keep up with demand.
"Bears cannot triumph in this scenario until inflows into spot Bitcoin ETFs cease," Ki remarked.
He highlighted that ETFs alone absorbed over 30,000 BTC last week, while known entities like exchanges and miners hold approximately 3 million BTC, including 1.5 million BTC held by US entities.
"At this pace, we anticipate a sell-side liquidity crisis within 6 months."
Grayscale Bitcoin Trust (GBTC) continues to defy the trend, experiencing daily outflows reaching $500 million.
Despite the BTC price surge since the ETF launch in January, WhalePanda, a prominent commentator, pointed out that the dollar value of GBTC's reduced BTC holdings has barely decreased.
"GBTC continues to face significant outflows, with $494 million leaving. Thanks Barry. Their Bitcoin holdings now stand below 400k,"
1.4 million BTC remaining?
When the tipping point driven by ETF demand arrives, Ki anticipates that the BTC price impact could surpass market expectations.
"Once a sell-side liquidity crisis emerges, the subsequent cyclical peak may surpass our predictions due to limited sell-side liquidity and a shallow order book," he concluded.
Ki illustrated a continuous broad uptrend in BTC held by "accumulation addresses" — wallets with only inbound transactions — which must double before the "crisis" unfolds.
As reported by Cointelegraph, holdings in accumulation addresses have started to stabilize as Bitcoin reaches new all-time highs.
This article does not provide investment advice or recommendations. Every investment and trading decision carries risks, and readers should conduct their research before making any decisions.