In just nine months, the supply of Bitcoin on cryptocurrency exchanges is expected to dry up due to the upcoming Bitcoin halving, which will reduce the supply issuance by 50%. This prediction is based on the assumption that inflows from US Bitcoin exchange-traded funds (ETFs) will continue, according to a report by Bybit on April 15.
Data from CryptoQuant shows that Bitcoin reserves on centralized exchanges dropped to a nearly three-year low of 1.94 million BTC on April 16. This decline in exchange reserves is expected to continue if the current trend of inflows from ETFs persists.
The report comes at a time when the overall market is experiencing a slump, with Bitcoin falling over 10% in the past week to $62,924, as reported by CoinMarketCap.
Bybit, the third-largest exchange in the world, anticipates that Bitcoin prices will start recovering from the current correction, as mentioned in the report.
According to Dune, weekly inflows into spot Bitcoin ETFs have been decreasing since March. Last week, the ETFs saw net inflows of over $199 million, down from $2.58 billion in the week starting March 11.
Despite the recent slump, the Bitcoin ETFs have accumulated over 841,000 BTC, valued at $52.9 billion, with net flows of over $12.7 billion since their launch.
Bybit’s asset allocation report from February 24 reveals that Bitcoin investor allocation has increased since September 2020. Institutions now allocate an average of 40% of their total assets to BTC, while retail investors allocate an average of 24%.
Bybit also noted that both crypto-native firms and traditional institutions are increasingly gaining exposure to Bitcoin through ETFs or proxy stocks like MicroStrategy. The exchange expects more institutions to follow suit.
In conclusion, the Bitcoin halving is expected to lead to a decrease in the supply of Bitcoin on exchanges in the coming months. This, combined with the growing interest from institutional investors, could contribute to the recovery of Bitcoin prices.