According to a recent report from cryptocurrency exchange Bybit, Bitcoin could potentially face a supply shortage in the next nine months due to intense buying pressure and the upcoming halving event. The report highlights that the remaining Bitcoin reserves on exchanges are quickly depleting, with only around 2 million Bitcoins left.
Bybit’s analysis suggests that if the daily inflow of $500 million continues into Bitcoin Spot ETFs, approximately 7,142 bitcoins could be withdrawn from exchanges each day. This trend indicates that all remaining reserves on exchanges could be exhausted in just nine months.
The next Bitcoin halving, scheduled for April 2024, is expected to further increase supply constraints by cutting the mining reward in half, making Bitcoin twice as scarce as gold. The report references the Stock-to-Flow (S2F) model, which measures the scarcity of a raw material. Currently, Bitcoin’s S2F ratio is around 56, close to gold’s 60, but is expected to double to 112 after the halving event.
Institutional investors have reportedly been actively investing in Bitcoin ahead of the halving, with a strong price correlation between Bitcoin and other cryptocurrencies. Furthermore, the approval of new products like Spot ETFs has allowed more institutions to gain exposure to Bitcoin, despite some investment mandates restricting commitments to newly launched products.
Ben Joe, co-founder and CEO of Bybit, stated that each Bitcoin halving reinforces the narrative of Bitcoin as a scarce digital asset, akin to digital gold. The upcoming halving in 2024 is expected to propel Bitcoin into a new era of unprecedented scarcity.
The Bitcoin halving, a critical event for the cryptocurrency, occurs roughly every four years and reduces the mining reward by half. This mechanism is designed to regulate the release of new bitcoins and control inflation. With the network’s fixed supply limited to 21 million units, the next halving will decrease the mining reward to 3,125 bitcoins per block.
Overall, the report from Bybit underscores the potential supply shortage that Bitcoin may face in the near future, as institutions continue to invest in the cryptocurrency ahead of the upcoming halving event in 2024.