Upcoming Bitcoin halving fuels bullish outlook

The upcoming Bitcoin halving, so very close, cannot fail to offer tremendous opportunities for the supply of Bitcoin on cryptocurrency exchanges, making its shortage more prominent. According to a report by Bybit, exchange reserves could very well be depleted in nine months, considering Bitcoin supply issuance was reduced by 50% and ETF demand for it was rising in the United States.

The data points to a falling 1.94 million BTC in reserves on centralized exchanges, which is the lowest in the last three years, as per the data recorded on April 16. The lower supply of the BTC, in this case, could make the BTC scarce offering price change vulnerabilities.

Exchange reserves. Source: CryptoQuant

This development comes amid a wider market slump, with Bitcoin’s price falling over 10% during the past week to $62,924, according to data from CoinMarketCap. 

Institutional and retail investors increase Bitcoin allocation

While this week’s fall may imply that the price of bitcoin may go higher either before or after the bitcoin halving, the report suggests the price may break the new record. Bybit, the third largest exchange in the world, looks forward to the post-halving supply-and-demand situation, which it says will result in “the price of the product soaring to a new record-breaking high due to the tightening of supply.”

“With this in mind, it’s unsurprising that Bitcoin’s price may continue to climb before the halving, or even afterward, as the supply squeeze propels the price to another new record.”

In addition, the analysis stresses the long-term increase of institutional and retail investors’ involvement in Bitcoin while pointing out that the number of Bitcoin holders has been higher than usual since the start of this year. As stated in Bybit’s asset allocation report dated 24th Feb., institutions are presently holding crypto in the average amount of 40% of their overall assets. In contrast, retailers hold 24% of their crypto assets.

Slowing inflows to Spot Bitcoin ETFs

Besides direct investments in Bitcoin spot ETFs, the inflows to these can also be viewed for proxy stocks like MicroStrategy, which convey exposure to cryptocurrency. The report tells us the same trends: crypto-native enterprises and typical ones are gaining more and more of Bitcoin’s influence through these channels.

The new funds will only be available for purchase in spot bitcoin ETFs and will likely take a prudent approach, reducing the inflow rate.

Although the market enthusiasm for the Bitcoin ETFs remains high, the weekly flows to the products have steadily reduced since March. Last week, the net inflows fell to $199,1 million against the previous week’s $2,58 billion, which marked the highest levels according to the Dune Analytics report.

Even though the psyche of ETFs has softened these days, the spot Bitcoins’ ETFs have collected over 841,000 in BTC, which is equivalent to 52.9 billion dollars, with a net inflow of 12.7 billion dollars since launch.