Bitcoin price is up today, as the available liquid supply hits an all-time low right as institutional investors increase their allocations to BTC.
Bitcoin (BTC) price is up today, rebounding from the Nov. 14 correction to $34,500 and hitting an intra-day high of $37,650. The rally comes after Bitcoin price briefly touched 1-week lows on Nov. 15. The hype around a spot BTC exchange-traded fund (ETF) is bringing significant inflows to Bitcoin as liquid supply is tightening, pushing prices across the crypto market higher.
Let’s look into the reasons why Bitcoin price is up today.
Potential spot BTC ETF approval boosts market sentiment
Despite a bevy of macro headwinds, Bitcoin price continues to push higher, achieving a 126% year-to-date gain and options market data shows traders angling toward the $40,000 level. The price move of the last two weeks sent the Crypto Fear and Greed index firmly in the “Greed” cohort, showing improved market sentiment.
After a rush of spot Bitcoin ETF amendments in mid-October, the first window for the Securities and Exchange Commission (SEC) to approve the 12 outstanding ETFs opened on Nov. 9.
New Research note from me today. We still believe 90% chance by Jan 10 for spot #Bitcoin ETF approvals. But if it comes earlier we are entering a window where a wave of approval orders for all the current applicants *COULD* occur pic.twitter.com/u6dBva1ytD
— James Seyffart (@JSeyff) November 8, 2023
To date, the SEC has refused to approve a spot Bitcoin ETF despite numerous applicants, including BlackRock, Fidelity, ARK Invest and 21Shares. The open period for approval lasts until Nov. 17. If the SEC continues the pattern of delaying a spot Bitcoin ETF approval, it remains open until Jan. 10.
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According to reports, an approval may generate $600 billion in new demand. CryptoQuant analysts believe that an ETF approval will lead to a $1 trillion increase in Bitcoin’s market capitalization.
Galaxy Digital predicts a 74% price increase in the first year after a spot BTC ETF launch.
Institutional inflows surpass $1 billion
While some investors may be awaiting increased liquidity from approved ETFs, institutional investors have already begun deploying funds to Bitcoin and crypto. According to CoinShares, institutional investors have pushed more than $1 billion into crypto in the past year.
Of the $1 billion pushed to crypto assets in the last year, over $240 million has flowed to Bitcoin specifically. Institutional investors also account for 19.8% of all Bitcoin trading volume.
Digital asset investment products saw inflows totalling US$293m last week.
Year to Date inflows: US$1.14bn (3rd highest yearly inflows on record)– #Bitcoin –
$BTC: US$240m innflows (year to date inflows: US$1.08bn)
Short Bitcoin: US$7m outflowsBitcoin ETP… pic.twitter.com/6UK1aDtF96
— CoinShares (@CoinSharesCo) November 13, 2023
Bitcoin supply tightens
While institutional investors continue to pour money into Bitcoin, the liquid available BTC supply is tightening. Coinciding with Bitcoin price gains, the BTC supply on exchanges remains below the May 3, 2023 peak. Exchanges have shed over 200,000 Bitcoin since that yearly peak, continuing a multi-year downtrend in BTC balances.
The market perceives coins leaving crypto exchanges as a bullish signal, given traders withdraw their BTC typically when they want to hold it in self-custody long-term. On Nov. 7, long-term Bitcoin holders hit an all-time in purchasing 92% of all newly BTC minted.
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Analysts at Glassnode believe that the exchange supply combined with short-term holder supply could mean available Bitcoin supply is at a historical low on a relative basis.
The analysis continues,
“If we compare Short-Term Holder Supply and Exchange Balances, we can see they are of a similar magnitude of around 2.3M BTC. Combined, these two measures of ‘available supply’ equate to 23.8% of the circulating supply, which is now at an all-time low.”
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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