Cryptocurrencies

The Bitcoin exchange reserve, which is the total amount of Bitcoin available on exchanges, has decreased.

The Bitcoin exchange reserve, which is the total amount of Bitcoin available on exchanges, fell to a 3-year low, according to data from June 19, 2024.

Analysis by CryptoQuant revealed that there are currently 2,825,703 Bitcoins (BTC) remaining on exchanges. As of January 2024, the Bitcoin exchange balance is around 3,039,000.

Low foreign exchange reserves, sometimes called foreign exchange balances, indicate low selling pressure and potential supply shocks due to relatively low supply available for purchase.

Bitcoin exchange balance as of June 19, 2024. Source: CryptoQuant.

Bitcoin ETF Pressure

Following the approval of Bitcoin ETFs in the United States in January 2024, the accumulation of asset managers such as BlackRock has further put pressure on the supply of Bitcoin. As of June 6, BlackRock’s iShares Bitcoin Trust (IBIT) owned approximately 274,000 Bitcoins. BlackRock’s ETF is just one of 11 Bitcoin ETFs currently trading in the United States.

As of May 2024, monthly flows into digital asset funds reached $2 billion, driven primarily by flows into Bitcoin funds and investment products. According to Coinshares’ weekly fund flow report released on June 17, Bitcoin investment vehicles hold approximately $73 billion worth of Bitcoin worldwide.

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However, this report also found that Bitcoin investment vehicles saw $621 million in weekly outflows for the week of June 15, 2024. This represents the largest and most significant outflows since the week of March 22, 2024.

Coinshares speculated that the Fed’s “tighter than expected” comments, which implied the Fed would keep interest rates high, led to capital flight from fixed-supply assets like Bitcoin.

Despite the growing institutional interest, industry experts, like Jenny Johnson, CEO of Franklin Templeton, believe that institutional adoption is not yet at full strength. Speaking to CNBC, Johnson told his interviewer: “This is really the first wave of early adopters, and I think the next wave will be much larger companies.” »

If Johnson’s predictions prove correct, institutional capital will continue to flow into Bitcoin, putting additional pressure on the exchange’s low supply in the months to come.

Halving in April 2024

Additionally, Bitcoin’s supply is further constrained by the declining block mining reward, following the April 2024 halving event.

Before the final halving, miners collected 6.25 BTC for each block they successfully mined, with miners now collecting 3,125 BTC for successfully mining a block.

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