Bitcoin is moving for the first time since 2010 due to a “sell-side liquidity crisis”

Written by Rock Buivy

Post Date: 30 Mar, 24

According to bitcoin study, there will soon be a unique supply pressure on bitcoin that should happen within the next year.

According to recent analysis, there is less time than ever for bitcoin until demand exceeds supply.

On March 26, the on-chain analytics platform CryptoQuant detailed a developing “sell-side liquidity crisis” in its most recent “Weekly Crypto Report.”

Report: “Twelve months” prior to release Bitcoin runs out of steam

This year has seen a sharp increase in the demand for bitcoin, in part because of the US spot exchange-traded funds (ETFs).

According to CryptoQuant, the effects of this ongoing bid are already being seen, and by Q1 2025, supply dynamics might have completely changed.

In terms of months of demand, the paper notes that “record Bitcoin demand paired with declining sell-side liquidity has resulted in the liquid inventory of Bitcoin plunging to the lowest ever.”

“We project that the current sell-side liquidity inventory for Bitcoin will only be sufficient to meet the current rate of growth in demand for a full year.”

The emphasis on ‘accumulating addresses’ in CryptoQuant’s calculations implies that net demand may be underestimated. By solely considering addresses with no outgoing transactions, this analysis focuses on the conservative end of Bitcoin demand.

It’s crucial to recognize that this approach may only capture a portion of overall demand, potentially overlooking more active participants in the market. As such, the true extent of Bitcoin’s demand dynamics might be more nuanced than initially perceived

When evaluating Bitcoin that is only available on US exchanges, the supply can only keep up with demand for half the time.

If we take out the Bitcoin on exchanges outside of the US, the liquid inventory of the cryptocurrency falls to six months’ worth of demand. Since US spot Bitcoin ETFs will only source Bitcoin from US businesses, we exclude these exchanges,” the paper explains.

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2,000 Bitcoin in motion from 2010

Speaking about the subject on X (formerly Twitter), Ki Young Ju, CEO of CryptoQuant, characterised the sell-side liquidity situation as old supply being “woke up.”

In response to evidence indicating coins that were mined in 2010 and had lain dormant since then, he was responding to a newly established wallet address.

As ETF inflows broke records in mid-March, Ki, who has already championed the ETF supply pressure narrative, predicted that it would last six months.

Since then, there have been several weeks of net outflows for the products – a pattern that seems to be turning around.

According to the most recent figures from UK-based investment firm Farside, net inflows on March 25 totaled $400 million, the highest amount in the previous two weeks.

The movement of 2,000 Bitcoin from 2010 has garnered significant attention within the cryptocurrency community, sparking speculation and analysis regarding the origin and intent behind this transaction.

Given that Bitcoin was in its infancy in 2010, with few individuals recognizing its potential, the movement of such a substantial amount from that period raises questions about the entity or individual holding these coins for over a decade.

The anonymity surrounding Bitcoin transactions adds to the mystery, leaving observers to speculate whether this transfer represents a strategic move by an early adopter or a shift in long-term investment strategies.

Furthermore, the timing of this movement coincides with Bitcoin’s evolution from a niche digital currency to a globally recognized asset, further amplifying its significance.

As Bitcoin’s value has surged over the years, early adopters who held onto their coins have seen astronomical returns on their investments.

Therefore, the decision to move such a large sum of Bitcoin from 2010 suggests strategic considerations, whether it be profit-taking, diversification, or a desire to actively participate in the evolving cryptocurrency landscape.

This transaction serves as a reminder of Bitcoin’s decentralized nature, where large movements of wealth can occur with little fanfare, yet have profound implications for the market and its participants.

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