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Expect Fireworks: Bitfinex Predicts 5X Bitcoin Demand Than Supply Post Halving

Bitcoin outflows from exchanges have reached a new high not seen since January 2023 as investors resort to self-custody ahead of an expected price surge, Bitfinex stated.

Investors flocking bitcoin

Crypto exchange Bitfinex’s analysts see a scenario where the daily demand for bitcoin (BTC) would be at least five times its supply after the halving event on Saturday.

According to Bitfinex Alpha weekly report, the exchange expects the demand surge to create a supply shock and, consequentially, an increase in the Bitcoin price.

The analysts alleged that the cut in the miner’s reward from 6.25 BTC to 3.125 BTC meant that the value of bitcoin mined daily now sits at $30 million. They also cited that the average inflows from US exchange-traded fund (ETF) products were far above $150 million; hence, demands from the funds alone would create a scarcity in a ratio more than five times the supply.

Supply Shock

“With the daily issuance rate declining post-halving, we estimate that the new supply added to the market (new BTC mined) would amount to approximately $40-$50 million in USD-notional terms based on issuance trends. It is expected that this could possibly drop over time to $30 million per day,” Bitfinex analysts stated, adding that the “average daily net inflows from spot Bitcoin ETFs dwarf that number at over $150 million, even though flows have moderated and even turned negative over recent weeks.”

If the predicted supply shock occurs, Bitcoin could experience extreme scarcity, potentially leading to a surge in its value. Bitcoin has already grown over 40% since the US Securities and Exchange Commission (SEC) approved the ETF product on January 11, moving from $48,000 to trade above $66,000. 

Crypto miners have already adopted a Bitcoin hoarding behavior, as Cointab reported that they have not sold over 75% of the assets mined since the first quarter of the year.

Investors Resort to Self-Custody: Bitfinex

Bitfinex analysts also noted that Bitcoin investors have recently resorted to self-custody of their assets, further declining the asset’s supply.

“Current on-chain data indicates that Bitcoin exchange outflows are reaching peaks not seen since January 2023, suggesting that many investors are moving their holdings to cold storage in anticipation of price increases,” the analysts noted.

Positive flows have resumed for ETF products, with Monday seeing a net inflow of $62 million. Hence, Bitcoin has continued to hold above $66,000 despite earlier reports of an impending capitulation after the halving event.

Elendu Benedict

Elendu Benedict is a professional writer with sheer competence in crypto-related journalism. With a background in Engineering, Benedict specialises on news related to ETFs, market analysis, and macroeconomic policies that affects the crypto market.