Data from June 19, 2024 shows that Bitcoin exchange reserves (the total amount of Bitcoin available on exchanges) have fallen to a three-year low.
According to CryptoQuant’s analysis, there are currently 2,825,703 Bitcoin (BTC) remaining on exchanges. During January 2024, Bitcoin exchange balances hovered around 3,039,000.
Low exchange reserves, also called exchange reserves, indicate that there is relatively little supply available for purchase, which means that selling pressure is low and supply shocks may occur.
Bitcoin ETF Pressure
Following the approval of Bitcoin ETFs in the United States in January 2024, additional pressure was placed on Bitcoin supply due to the accumulation of assets by asset managers such as BlackRock. As of June 6, BlackRock’s iShares Bitcoin Trust (IBIT) holds approximately 274,000 bitcoins. BlackRock’s ETF is just one of 11 Bitcoin ETFs currently trading in the United States.
Monthly inflows into digital asset funds reached $2 billion during May 2024, driven primarily by inflows into Bitcoin investment funds and products. Bitcoin investment vehicles hold nearly $73 billion worth of Bitcoin globally, according to the Coinshares Weekly Fund Flows report dated June 17.
Related: Bitcoin whales swept $1.4 billion in 24 hours amid market correction..
However, the same report states that Bitcoin investment vehicles recorded weekly outflows of $621 million during the week of June 15, 2024. This marks the largest and most significant outflow since the week of March 22, 2024.
Coinshares theorizes that the Fed’s “more hawkish than expected” comments, implying it will keep interest rates high, are leading to capital flight from fixed-supply assets like Bitcoin.
Despite the growing institutional interest, industry experts such as Jenny Johnson, CEO of Franklin Templeton, believe institutional adoption is not in full swing. Johnson said in an interview with CNBC: “This is really the first wave of early adopters, and I think the next wave will be much larger institutions.”
If Johnson’s prediction turns out to be true, institutional capital will continue to flow into Bitcoin, putting additional pressure on low exchange supply in the coming months.
April 2024 halving
Additionally, Bitcoin’s supply will be further limited due to reduced block mining rewards following the April 2024 halving event.
Before the most recent halving, miners collected 6.25 Bitcoin for each block they successfully mined, and after the halving, miners now collect 3.125 Bitcoin for successfully mining a block.
magazine: Should children take the ‘orange pill’? Bitcoin Children’s Book Case Study.