In this short article, I’d like to show you just one piece of evidence, out of dozens, that illustrates how unprecedented the supply shock Bitcoin is going through is. You’ll notice, in previous blow-off tops, such as the infamous late 2017 bull run washout, the chart this time shows completely different dynamics.
Let’s get into the chart, courtesy of Glassnode. It is referred to as ‘Liquid Supply Change‘, and it helps to solidify the bullish narrative in Bitcoin. Not only are Bitcoins moving off exchanges at record pace, but more Bitcoin supply is becoming illiquid every day, in other words, held by strong hands, with little history of selling.
And that’s just on the supply side. We’ve seen 2 huge shifts, the supply and the demand. Both are intertwined but for argument sake, I just want to stress out the constant upward pressure that such backdrop puts in the price of BTC first only to see the market diversify into the Alts complex as the money flow cycle matures.
On the demand side, Morgan Stanley and PayPals of the world have come in. That shifts the demand curve. In fact, this demand curve is in constant evolution to the upside due to network effects. In layman terms, exponential adoption. We then had the supply of newly-issued bitcoin saw the halving shock in May – as part of the every-four-years halving of bitcoin issuance.
Jeremy Kinstlinger, our legendary Co-Founder at Global Prime, just dropped this screenshot below, stating “meanwhile institutions keep piling in.” Again, no surprise there.
The above findings is what I am referring to. That’s precisely why the chart I showed above hypothesises that such institutional interest is well represented by that supply depletion as coins get withdrawn from exchanges. There are studies done that estimate institutions manage on aggregate $100T, and now some of that is flowing into Bitcoin.
Mark my words here. These institutions simply don’t typically behave like the retail herd from 2017. These institutions amass for the purpose of speculation or as service, so they buy it to hold it, which reduces the availability of Bitcoin to purchase. Besides, BTC has also proven a great option to reduce portfolio vol given non correlated nature, not to mention as alpha-generating outlier.
These are fascinating times in whats truly a remarkably unique asset. There will be bumps along the road with eventually a blow-off top. However, when posing the question, Is this time different? If we compare this bull run with the previous one, I think we can agree, through on-chain data analytics, that the macro thesis to embrace BTC has never been more compelling.