Bitcoin Supply Crunch Intensifies Post-Halving

The recent Bitcoin halving event has triggered a supply squeeze, leading to increased demand and price appreciation. According to a Bitfinex market report, Bitcoin's supply on centralized exchanges has significantly decreased, while miners have retained their holdings. The report anticipates a further decline in selling pressure and a surge in spot Bitcoin cash inflows, creating a supply-demand imbalance.

Bitcoin Supply Squeeze Intensifies Post-Halving Event

London, April 26, 2024 - The anticipated Bitcoin supply squeeze has commenced following the recent halving event, as reported by Bitfinex in its latest market analysis.

After a bullish rally post-halving, Bitcoin (BTC) has sustained its upward momentum, reaching a peak of $67,200 within the past 24 hours before stabilizing around $66,200 during the mid-London session on Tuesday.

Notably, the supply of Bitcoin on centralized exchanges has witnessed a substantial decline in the months leading up to the halving, an unprecedented occurrence in the cryptocurrency's history. Moreover, Bitcoin miners have maintained their supply despite the halving of their block rewards.

The recent approval of spot Bitcoin exchange-traded funds (ETFs) in Hong Kong and the growing interest from institutional investors seeking to hedge against inflation have further fueled the demand for Bitcoin.

With a current daily emission rate of approximately 450 Bitcoins, the rising global demand is expected to drive Bitcoin prices higher. Nation-states, such as El Salvador, are also accumulating Bitcoin, contributing to the supply shock.

Bitfinex's market report emphasizes that the Bitcoin supply squeeze has already begun. The analysts at Bitfinex anticipate that the overall selling pressure on Bitcoin, including from miners and other traders, will soon decline to approximately $30 million.

Combined with the daily average spot Bitcoin cash inflows of around $150 million, despite the recent price correction, this creates a significant supply-demand imbalance. On-chain data further indicates a surge in Bitcoin outflows from exchanges, mirroring the behavior observed during previous bull cycles.

"Remarkably, the active selling by long-term holders has not yet triggered the typical pre-halving price drop, suggesting strong absorption of this selling pressure by new market entrants," the Bitfinex analysts noted.

In terms of medium-term price expectations, Bitcoin's price has oscillated between $74,000 and $60,000 over the past two months. Despite the ongoing consolidation, popular crypto analyst Michaël van de Poppe suggests that Bitcoin could remain range-bound in the coming months, potentially leading to an altseason characterized by strong performance from alternative cryptocurrencies.

"Bitcoin is still consolidating within the range, through which this is now more than six weeks. Boredom has come back into the markets, but anything sub $60K is a massive buy opportunity," van de Poppe tweeted.

From a technical perspective, Bitcoin's monthly Relative Strength Index (RSI) is currently retesting the bullish breakout level of 70. This trend bears striking similarities to the crypto bubble observed in 2016-2017, which underscores the potential for further price appreciation.