Bitcoin Supply Squeeze? Institutions Absorb 500% Of New BTC

Data shows institutions are gobbling up Bitcoin supply over five times faster than miners can produce, a sign that has been bullish in the past.

Bitcoin Is Observing A Notable Buying Push From Institutional Entities

In a new post on X, Capriole Investments founder Charles Edwards has talked about the latest institutional buying behavior toward Bitcoin. To capture the combined institutional behavior, Edwards has totaled up the holdings of the treasury companies and exchange-traded funds (ETFs), both of which serve as mediums through which institutions acquire indirect exposure to the cryptocurrency.

Now, here is the chart shared by the analyst that shows the rate of change in the combined institutional holdings of Bitcoin over the last few years:

The value of the metric appears to have shot up in recent days | Source: @caprioleio on X

As displayed in the above graph, the ROC of institutions’ Bitcoin holdings has witnessed a spike recently, suggesting a surge in accumulation from big-money investors. In the same chart, the ROC data for treasuries and ETFs is also separately shown. From these curves, it would appear that the uptick in the total institutional buying has been a result of surges in both vehicles.

The rise in the ROC of the institutions has been so strong that it has been many times that of the Bitcoin supply itself. Naturally, the ROC of the BTC supply is just the new number of tokens that miners are introducing into circulation via block rewards. This tends to remain quite stable on the network, which is why the metric has a flat line on the chart.

There is, however, a point in the chart where BTC’s ROC drops down a step. This decline in mined supply corresponded to the last Halving, a type of event where the BTC network slashes its block subsidy exactly in half about every four years. “Institutions are slurping up 500%+ of Bitcoin’s daily mined supply,” noted Edwards. The analyst has highlighted in the graph what happened the last few times that institutional buying hit this level.

It would seem that such a level of accumulation from institutions has tended to lead to positive price action for the cryptocurrency. “The average return in prior cases is +24% over the next 1 month,” explained the analyst. If the same pattern plays out this time as well, then a similar 24% surge would mean a target of around $97,000.

It now remains to be seen whether institutions will keep up their buying in the coming days or if the current uptick is going to be temporary, like the one from March.

BTC Price

At the time of writing, Bitcoin is trading around $78,700, up 1% over the past week.

Looks like the price of the coin has been moving up in the last few days | Source: BTCUSDT on TradingView

Featured image from Dall-E, chart from TradingView.com

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