Monday, February 8, 2021

Bitcoin Whales May Create BTC Deficit

Fundamental factors have continued to support the bullish outlook for Bitcoin (BTC) and the price of the flagship cryptocurrency has confirmed this over the past weeks. Against this background, wealthy Bitcoin whales are fueling demand for BTC even more, actively buying up coins and cleaning up Bitcoin reserves on exchanges. This, however, could potentially lead to a supply crisis.

Is Bitcoin deficit good or bad?

According to Bloqport, since the beginning of the year, 211 new wallets have appeared on the market, storing 1,000 bitcoins or more. Meanwhile, stocks of bitcoins on exchanges have reached their lowest level in almost 2.5 years.

The volume of bitcoins stored on exchanges has been steadily declining since March 2020. According to CryptoQuant statistics, as of February 6, 2021, this figure was 2.3 million, a marked decrease compared to the beginning of the year.

Stocks of BTC on exchanges: CryptoQuant

Meanwhile, Bitcoin is not looking to show signs of fading bullish momentum. Fews hours ago, Bitcoin once again renewed its all-time highs, staging an unexpected rally near the $45,000 region.

Institutional effect

The number of active addresses also signals a positive market sentiment for cryptocurrency. According to Glassnode, existing BTC wallet addresses have reached a new peak at 1.34 million. This figure surpassed the previous record of 1.28 million attained on December 14, 2017, in the wake of bullish euphoria.

Active Addresses: Glassnode

As statistics show, there is a correlation between Bitcoin price and the number of active wallets. This may well indicate that Bitcoin has not yet exhausted its growth potential.

Read also: Bitcoin Will Be 100x More Expensive than Gold – Bloomberg

The insatiable appetite of Institutional investors is an important factor behind the Bitcoin scarcity.

According to CNN, ARK Investment Management LLC is the largest shareholder of the Grayscale Bitcoin Trust (GBTC) with 6,257,925 shares. In total, the GBTC controls more than half of all digital assets held on the company’s custodian services, according to Bitcoin Treasuries. At the time of writing, Grayscale manages 649,130 bitcoins.

If you have any questions and comments on Bitcoin today, use the form below to reply.

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