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Bitcoin (BTC) Supply Shock Unlikely in 2025: Here’s Why
The post Bitcoin (BTC) Supply Shock Unlikely in 2025: Here’s Why appeared on BitcoinEthereumNews.com. With Bitcoin’s increasing presence in traditional financial systems and speculation around a US BTC strategic reserve, some experts foresee a major supply shock during this cycle, potentially disrupting the 4-year cycle theory with extraordinary price growth. However, a new report indicates that such a supply shock is unlikely to happen in 2025. Analyzing Bitcoin Long-Term Holder (LTH) Supply While Bitcoin’s halving, rising institutional interest, and the introduction of spot BTC ETFs in the US have amplified discussions of constrained supply, detailed data suggests otherwise, according to a report by CEX.IO, shared with CryptoPotato. The combination of long-term holder (LTH) activity, ETF activity, and evolving liquidity trends indicates a strong supply ecosystem that is capable of mitigating potential shocks. Key to this assessment is the behavior of LTH supply post-halving. Historically, halving events trigger a notable transition of coins from LTH to short-term holders (STH), thereby increasing market liquidity. In 2024 alone, LTH supply dominance fell by 9%, releasing 1.58 million BTC into the market. With an average 16% decline in LTH dominance observed during previous post-halving cycles, a projected transfer of 1.4 million BTC from LTH to STH is expected in 2025. The report explained that this ensures that increased demand from institutions or governments will likely be met by substantial LTH profit-taking, tempering supply constraints. ETF Dynamics, OTC Activity, and Market Liquidity ETF activity, often cited as a potential driver of supply shocks, also appears less impactful upon closer examination. Despite US spot Bitcoin ETFs amassing over 1.13 million BTC in 2024, much of this accumulation stemmed from cash-and-carry trades rather than direct directional investments. These arbitrage strategies, which are reliant on derivatives like CME futures, balance supply and demand without directly pressuring spot markets. Additionally, ETFs currently account for less than 4% of Bitcoin’s total trading volume, which…
The post Bitcoin (BTC) Supply Shock Unlikely in 2025: Here’s Why appeared on BitcoinEthereumNews.com.
With Bitcoin’s increasing presence in traditional financial systems and speculation around a US BTC strategic reserve, some experts foresee a major supply shock during this cycle, potentially disrupting the 4-year cycle theory with extraordinary price growth. However, a new report indicates that such a supply shock is unlikely to happen in 2025. Analyzing Bitcoin Long-Term Holder (LTH) Supply While Bitcoin’s halving, rising institutional interest, and the introduction of spot BTC ETFs in the US have amplified discussions of constrained supply, detailed data suggests otherwise, according to a report by CEX.IO, shared with CryptoPotato. The combination of long-term holder (LTH) activity, ETF activity, and evolving liquidity trends indicates a strong supply ecosystem that is capable of mitigating potential shocks. Key to this assessment is the behavior of LTH supply post-halving. Historically, halving events trigger a notable transition of coins from LTH to short-term holders (STH), thereby increasing market liquidity. In 2024 alone, LTH supply dominance fell by 9%, releasing 1.58 million BTC into the market. With an average 16% decline in LTH dominance observed during previous post-halving cycles, a projected transfer of 1.4 million BTC from LTH to STH is expected in 2025. The report explained that this ensures that increased demand from institutions or governments will likely be met by substantial LTH profit-taking, tempering supply constraints. ETF Dynamics, OTC Activity, and Market Liquidity ETF activity, often cited as a potential driver of supply shocks, also appears less impactful upon closer examination. Despite US spot Bitcoin ETFs amassing over 1.13 million BTC in 2024, much of this accumulation stemmed from cash-and-carry trades rather than direct directional investments. These arbitrage strategies, which are reliant on derivatives like CME futures, balance supply and demand without directly pressuring spot markets. Additionally, ETFs currently account for less than 4% of Bitcoin’s total trading volume, which…
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