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Is Bitcoin’s supply squeeze signaling the start of a new rally?
Bitcoin’s recent price action has left many wondering what could be driving its upward momentum. While some may argue that the current surge is simply a result of speculation and market manipulation, one factor stands out as a crucial driver of this rise: Bitcoin’s supply squeeze.
Over the past month, Bitcoin’s spot market demand has seen an unprecedented spike. This growth in demand, coupled with the decline in Futures market activity, suggests that we are witnessing a fundamental shift in investor behavior. As such, it is important to understand what implications this has on the cryptocurrency’s price action and overall trajectory.
In order to do so, let us first examine Bitcoin’s supply dynamics. It is well-known that the cryptocurrency’s supply is capped at 21 million coins, making it impossible for the same forces of inflation we see in fiat currencies. This fundamental aspect of its nature means that Bitcoin’s supply squeeze plays a crucial role in determining its price.
Recent data suggests that this supply squeeze has taken hold, with Bitcoin’s stock-to-flow ratio spiking to an unprecedented 46.5k after plummeting to 37k. What does this mean for the cryptocurrency’s price?
Source: ambcrypto.com
