Bitcoin Poised for a Rally? Exchange Liquidity Drying Up

Despite recent sideways movement, Bitcoin’s on-chain data hints at a potential rally in the near future. Here’s why:

Exchange Liquidity Depletion

Cryptocurrency analyst Ki Young Ju reports that the Bitcoin Liquid Inventory Ratio has reached an all-time low. This ratio measures the amount of Bitcoin readily available for trading on major exchanges. When it drops, it often signals a supply shortage.

With less Bitcoin available for purchase on exchanges, buyers must compete for a limited supply, potentially driving up prices.

Rise of Spot Bitcoin ETFs

Demand for spot Bitcoin exchange-traded funds (ETFs) is increasing in the US. These ETFs allow institutions and investors to hold Bitcoin without the hassle of managing private keys.

As demand for spot Bitcoin ETFs grows, the supply of Bitcoin available for trading on exchanges decreases.

Supply Crisis Brewing

If high demand for Bitcoin persists, coupled with withdrawals from exchanges and a shift to spot Bitcoin ETFs, a supply crisis could emerge.

Halving Event Anticipation

The Bitcoin halving event in April 2024 is also contributing to the anticipation of price support. Historically, halving events have been followed by price surges.

Overall, the dwindling exchange liquidity, rising institutional demand, and anticipation of the halving event suggest that Bitcoin is poised for a rally in the coming days.