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Bitcoin Supply Shock? On-Chain Data Tells Different Story
A recent tweet by the on-chain analytics platform Glassnode has sparked a heated debate in the cryptocurrency space regarding the notion of a supply shock. According to the data, there is no evidence to support this claim.
The narrative suggests that falling exchange balances automatically indicate a supply shock, but this notion is being challenged by Glassnode’s findings. The platform highlights that long-term holders are absorbing more Bitcoin (BTC) than miners issue, which means pressure builds elsewhere in the ecosystem.
Glassnode emphasizes that the idea of “BTC balance on exchanges dropping = supply shock” is a meme, and while it may not be accurate, there could still be real supply constraints developing beneath the surface. This contradicts the previous notion that institutional demand from exchange-traded funds (ETFs) drives up Bitcoin prices.
The findings support the view that supply-side conditions are tightening as long-term holders continue to absorb more newly issued supply than miners issue. As a result, the market becomes increasingly vulnerable to demand shocks, causing significant price volatility.
Bitcoin has seen an impressive surge recently, with its price reaching new all-time highs of $118,909 on Friday. This rally was preceded by short liquidations totaling over $1.15 billion in a single day, the largest recorded over the last four years.
The situation is more nuanced than a simple supply-demand metric, as other factors are at play.
Source: u.today
