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Bitcoin (BTC) Supply Faces Potential Shortage Amid Rising Prices
The cryptocurrency market has been witnessing a significant surge in the price of Bitcoin (BTC), with its value surpassing $108,000. This sudden hike in prices is accompanied by a tightening of the digital currency’s supply, sparking concerns about a potential shortage.
According to Bitfinex Alpha’s first 2025 edition, the liquidity reserve ratio has drastically decreased from 41 months to merely 6.6 months. This stark decline indicates that the current available Bitcoin on the market can only fulfill demand for a limited period, hinting at an imminent depletion of supply.
Furthermore, data suggests that Bitcoin miners have significantly reduced their exchange deposits since April 2024, opting instead to ‘hodl’ (hold) onto substantial unrealized profits rather than selling. This collective decision has led to a significant decrease in the overall selling pressure from these groups.
As a result, the market is experiencing reduced supply pressure from miners, long-term investors, and other entities. This development contributes substantially to Bitcoin’s ongoing strength and resilience against recent market corrections.
On a broader scale, the US economy showed signs of recovery at the end of 2024, with jobless claims dropping to an eight-month low by December. Although certain sectors remain uncertain, this unexpected decline has reinforced confidence in the economy’s adaptability.
In contrast, the global manufacturing sector is still reeling from the aftermath of previous Federal Reserve interest rate hikes. While recent cuts in borrowing costs and the prospect of fiscal stimulus under the upcoming administration offer some respite, concerns about trade policies and volatile global demand continue to overshadow its outlook.
The cryptocurrency market remains closely tied to the performance of traditional markets. The intersection between digital assets and politics is also gaining traction, with US Congressman Mike Collins recently filing his investments in Ski Mask Dog (SKI), ranging from $1,001 to $15,000. This revelation raises questions about transparency and regulatory oversight.
FTX, a defunct cryptocurrency exchange, has begun restructuring plans aimed at compensating users affected by its 2022 collapse. Customers who have already submitted claims can anticipate refunds within the next 60 days, with priority given to smaller claimants.
In related news, MicroStrategy announced an ambitious plan to raise up to $2 billion through perpetual preferred stock issuance as part of its ’21/21 Plan’ to secure a staggering $42 billion over three years for Bitcoin acquisition.
Source: Blockchain.News
