The demand for Bitcoin is increasing while the available supply is decreasing. Analysis from a market intelligence firm shows that the demand for Bitcoin has been rising since late September, with a monthly increase of approximately 228,000 BTC. This surge in demand is happening at the same time as a decline in the total amount of Bitcoin available for sale across various platforms. The current inventory levels are at lows not seen since October 2020, indicating a significant demand shock in the market.
The number of BTC accumulator addresses, which are investors who purchase Bitcoin and never sell, is growing at a rate of 495,000 BTC per month. This trend shows that long-term investors are becoming more confident and choosing to hold onto their assets rather than sell. This behavior contributes to the tightening of available supply, further intensifying the demand-supply imbalance.
Additionally, the inventory levels at over-the-counter (OTC) desks, which primarily serve institutional and large-scale buyers, are also declining. This indicates that as demand continues to outpace supply, the balances held by OTC desks are diminishing. This relationship between demand and supply is crucial for understanding the current market conditions. When demand exceeds supply, it leads to a reduction in available inventory at OTC desks, which can impact market liquidity and pricing.
Sell-side liquidity for Bitcoin has fallen to levels not seen in over four years. The total sell-side liquidity is currently around 3.397 million BTC, a decrease of 678,000 BTC so far this year. This reduction in liquidity limits the potential for selling pressure in the market, creating an environment where price increases may be more likely as buyers compete for a shrinking supply.
The market capitalization of USD-based stablecoins has surpassed $200 billion for the first time, indicating renewed interest and investment in the sector. This growth in stablecoin market cap provides a buffer for market participants, allowing for more significant trading volumes and potentially stabilizing prices during periods of volatility.
Investors and market participants should be aware of the challenges and opportunities presented by the current Bitcoin market. With demand outpacing supply and liquidity at historic lows, navigating this complex environment requires vigilance and understanding of the underlying trends. The behavior of long-term holders, the dynamics of OTC desks, and the role of stablecoins will all play a crucial role in shaping the future trajectory of Bitcoin prices.