Growth Of Bitcoin ETFs & Other Instruments Doesn’t Support Supply Shock Narrative
December 22 2021 - 2:00PM
NEWSBTC
Data shows while the Bitcoin supply present on exchanges has been
trending down, growth in other investment vehicles like ETFs and
WBTC has been making up for this drop. Bitcoin Exchange Reserves
Decline, But ETF And Other Instruments Enjoy Growth As per the
latest report from Arcane Research, BTC exchange reserves have seen
significant decline this year, but the growth in newer investment
instruments like ETFs has made up for it. The “exchange reserve” is
an indicator that measures the total amount of Bitcoin currently
stored in wallets of all exchanges. Traditionally, this supply on
exchanges has been considered the available trading supply of the
coin. So, when the indicator’s value moves up, it’s taken as a
bearish sign for the coin’s price. On the other hand, a decrease
may imply bullish trend. The trend with the exchange reserve has
been that of constant decline since half a year now. Because of
this “supply shortage”, many traders believe in a bullish outcome
for Bitcoin in the long term. Related Reading | Bitcoin
Bullish Signal: Open Interest Shows Strong Trend Up However, the
report seems to suggest a different story. Here is some data that
shows the percentage of the circulating BTC supply in different
segments: Looks like most sectors have seen growth in the past year
| Source: The Arcane Research Weekly Update - Week 50 As you can
see in the above graph, while the exchange supply has gone down,
growth in other segments seems to more than make up for this
decline. Related Reading | Despite Crackdown, Bitcoin Mining
Is Still Alive And Well In China The exchange traded investment
vehicles now hold 0.69% more supply than last year. This shows that
there is increasing demand for trading Bitcoin through the familiar
means (like ETFs). This trend may also indicate rising adoption
from institutional investors. With a 0.98% increase this year, BTC
on the Ethereum network now accounts for 1.73% of the total
circulating supply. The report notes that both these sectors are
important factors for Bitcoin’s price discovery, and so growth here
may not support the popular idea that a supply shock is brewing in
the crypto due to declining exchange reserves. By the way,
corporate treasuries now hold 0.91% of the circulating BTC supply.
Microstrategy has been the main push behind this growth. BTC Price
At the time of writing, Bitcoin’s price floats around $48.8k, up
1.5% in the last seven days. Over the past month, the crypto has
lost 16% in value. Below is a chart that shows the trend in the
price of the crypto over the last five days. BTC's price seems to
have surged up in the past couple of days | Source: BTCUSD on
TradingView Featured image from Unsplash.com, charts from
TradingView.com, Arcane Research
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