According to recent study, there is less time than ever for bitcoin before demand exceeds supply.
On March 26, the on-chain analytics platform CryptoQuant detailed a developing “sell-side liquidity crisis” in its most recent “Weekly Crypto Report.”
This year has seen a sharp increase in the demand for bitcoin, in part because of the US spot exchange-traded funds (ETFs).
According to CryptoQuant, the effects of this ongoing bid are already being seen, and by Q1 2025, supply dynamics might have completely changed.
In terms of months of demand, the paper notes that “record Bitcoin demand paired with declining sell-side liquidity has resulted in the liquid inventory of Bitcoin plunging to the lowest ever.”
“We project that the current sell-side liquidity inventory for Bitcoin will only be sufficient to meet the current rate of growth in demand for a full year.”
The fact that only “accumulating addresses”—those with no outgoing transactions—were taken into account in CryptoQuant’s computations suggests that net demand might still be higher.
It states, “This is only taking into account demand from accumulating addresses, which could be viewed as the lower-end of the Bitcoin demand spectrum.”
When evaluating Bitcoin that is only available on US exchanges, the supply can only keep up with demand for half the time.
If we take out the Bitcoin on exchanges outside of the US, the liquid inventory of the cryptocurrency falls to six months’ worth of demand. The research states, “We exclude these exchanges in light of the fact that US spot Bitcoin ETFs will only source Bitcoin from US entities.”
2,000 Bitcoin in Motion From 2010
Speaking about the subject on X (formerly Twitter), Ki Young Ju, CEO of CryptoQuant, characterized the sell-side liquidity situation as old supply being “woke up.”
In response to evidence indicating coins that were mined in 2010 and had lain dormant since then, he was responding to a newly established wallet address.
As ETF inflows broke records in mid-March, Ki, who has already championed the ETF supply pressure narrative, predicted that it would last six months.
Since then, there have been several weeks of net outflows for the products—a pattern that seems to be turning around.
According to the most recent figures from UK-based investment firm Farside, net inflows on March 25 totaled $400 million, the highest amount in the previous two weeks.
