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Supply Squeeze & Parabolic Bull Run

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As the cryptocurrency market edges closer to the anticipated Bitcoin halving on April 25, 2024, supply and demand dynamics set the stage for a parabolic bull run.

Unlike previous cycles, this year signals a departure, fueled by growing institutional adoption and expanding use cases, painting a bullish picture for Bitcoin.

Why the Halving Positions Bitcoin in a Parabolic Bull Run

The approval and success of spot Bitcoin exchange-traded funds (ETFs) have marked a historic milestone in the crypto’s journey. Since their inception, Bitcoin has witnessed a substantial 60% price growth, with trading volumes reaching unprecedented highs.

The influx of institutional interest in Bitcoin ETFs has attracted over $30 billion in assets under management in two months. This surge in demand is also reflected by a record-breaking $1 billion of inflows in a single day. Meanwhile, net flows exceed $10 billion, and daily inflows triple the daily minted supply.

This scenario is poised to intensify post-halving, with ETFs holding over 467,000 BTC, excluding Grayscale, significantly outstripping Bitcoin’s annualized supply of 164,000 BTC.

The existing appetite for BTC has already taken up about 4.5% of its accessible supply. Therefore, an increasing adoption of Bitcoin ETFs could catalyze a supply squeeze.

“With Registered Investment Advisors overseeing around $114 trillion in the US, mandated to wait 90 days post new product launches before investing, a mere 1% allocation to Bitcoin could trigger substantial inflows, nearly doubling its current market cap and resulting in a supply squeeze in the process,” analysts at 21Shares wrote.

Read more: Bitcoin Halving Cycles and Investment Strategies: What To Know

Bitcoin ETF Holdings
Bitcoin ETF Holdings. Source: CryptoQuant

The steadfast confidence of long-term Bitcoin holders, despite the market’s volatility, also exemplifies the unshakeable belief in Bitcoin’s value proposition. The supply held by these long-term investors remains at approximately 70% of the total circulating supply.

Meanwhile, the supply held by short-term holders has surged by over 33%, further constraining available supply and hinting at an impending price surge.

According to analysts at 21Shares, the upcoming Bitcoin halving on April 25, 2024, set against this backdrop, suggests that the cryptocurrency market may be on the cusp of a unique and potentially unprecedented bullish cycle. With the ETFs drawing in a new wave of traditional investment and the unwavering conviction of long-term and short-term holders, Bitcoin’s supply constraints are becoming increasingly pronounced.

“If this trend persists, Bitcoin’s supply side will increasingly become illiquid, laying the groundwork for a supply squeeze and the potential onset of a parabolic bull run,” analysts at 21Shares concluded.

Read more: Bitcoin Price Prediction 2024 / 2025 / 2030

Bitcoin Supply Held by Long-Term Holders
Bitcoin Supply Held by Long-Term Holders. Source: Glassnode

While acknowledging Bitcoin’s inherent volatility, the current environment appears primed for a significant upward trajectory as the 2024 halving approaches. This cycle may differ from its predecessors and could usher in a new era of institutional adoption and financial recognition.

Disclaimer

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