A recent analysis report by crypto asset exchange Bybit suggests that there may be a shortage of BTC by the end of 2024 if the demand from users remains at the same level. The report predicts that if the current withdrawal rate continues (approximately 7,000 BTC per day), the BTC reserves could be depleted within the next nine months.
The shortage prediction is closely tied to the BTC halving event in 2024, which will reduce the BTC production per block by half. Alex Greene, a senior analyst at Blockchain Insights, stated that the rapid depletion of BTC reserves is a warning sign to the market to prepare for a potential liquidity crisis. As the reserves decrease, the market’s ability to absorb a large volume of sell orders without affecting the price will weaken.
According to Bybit’s report, institutional investors have significantly increased their BTC investments following the recent approval of spot BTC ETFs by US regulatory agencies. This surge in institutional interest has greatly contributed to the growth in BTC demand amidst a decreasing supply. Greene pointed out that this increase could exacerbate the BTC shortage and drive up prices after the halving.
The nine new ETFs are purchasing BTC at a rate of approximately $500 million per day, which is equivalent to extracting around 7,142 BTC from the exchange reserves daily. Meanwhile, centralized exchanges are left with only about 2 million BTC in reserves. Bybit warns that if the demand remains high even after the daily mining supply is reduced to 450 BTC, the exchange’s supply may disappear by early next year.
The next halving will decrease the mining reward per block from 6.25 BTC to 3.125 BTC, further limiting the entry of new BTC supply into the market. This programmed reduction simulates the scarcity of resources, similar to precious metals, and aims to control inflation while increasing the value of BTC.
Miners will face the challenge of reduced rewards and increased production costs, which is likely to decrease the frequency of immediate selling after BTC is generated. The decrease in miner sales will result in a scarcity of BTC on public exchanges, further driving up prices. Maria Xu, a crypto asset market strategist, stated that miners are adapting to the increase in costs and decrease in returns. Many miners may sell a portion of their reserves before the halving to sustain operations, temporarily increasing the supply of BTC, but a long-term decrease in supply is inevitable after the halving.
Bybit’s analysis indicates that the tightening of BTC supply is a critical and urgent issue that has a significant impact on BTC pricing and investment strategies. However, the exchange remains optimistic for the coming months and believes that the supply reduction could intensify the “fear of missing out” (FOMO) among new investors, potentially driving the price of BTC to unprecedented levels.
