The highly anticipated Bitcoin halving event is expected to create significant opportunities for cryptocurrency exchanges as the supply of Bitcoin becomes scarcer. According to a report by Bybit, exchange reserves could be depleted within nine months due to the 50% reduction in Bitcoin supply issuance and the increasing demand for Bitcoin ETFs in the United States.
Data shows that centralized exchanges currently have a record low of 1.94 million BTC in reserves, the lowest in the past three years as of April 16. This limited supply of BTC could lead to price fluctuations and vulnerabilities in the market.
Exchange reserves. Source: CryptoQuant
This news comes amidst a broader decline in the market, with Bitcoin’s price dropping by over 10% in the past week to $62,924, according to data from CoinMarketCap.
The report also highlights the growing interest of institutional and retail investors in Bitcoin. The number of Bitcoin holders has been higher than usual since the beginning of the year, with institutions currently holding an average of 40% of their overall assets in cryptocurrencies, while retailers hold 24% of their crypto assets, according to Bybit’s asset allocation report dated February 24.
In addition to direct investments in Bitcoin spot ETFs, the inflows to proxy stocks like MicroStrategy, which provide exposure to cryptocurrency, are also increasing. This indicates that both crypto-native companies and traditional businesses are gaining more influence in the Bitcoin market through these channels.
Although the enthusiasm for Bitcoin ETFs remains high, the weekly flows into these products have steadily decreased since March. Last week, net inflows fell to $199.1 million, compared to the previous week’s $2.58 billion, which was the highest level recorded, according to the Dune Analytics report.
Despite the recent decline in ETF interest, spot Bitcoin ETFs have accumulated over 841,000 BTC, equivalent to $52.9 billion, with a net inflow of $12.7 billion since their launch.