CryptoMode Bitcoin Supply Shortage

As all eyes return to bitcoin following the recent Tesla news, it is crucial to gauge market liquidity. For centralized exchange, the proverbial “supply shortage’ looms ever closer. Fewer and fewer BTC are kept on these platforms, which is a welcome sight. 

A Looming Bitcoin Supply Shortage?

Several enthusiasts continue to claim how centralized trading platforms may face a Bitcoin supply shortage. An intriguing thought, albeit it will require a significant decrease in the exchange’s BTC holdings. Trading on these platforms is not the only way of getting Bitcoin at market prices but often the most straightforward option when dealing with smaller amounts.

Looking at the CryptoQuant data, it is evident the available BTC supply on exchanges keeps dwindling. This trend is not new as it has been going on for months. A significant paradigm shift took place in March 2020, and the trend still continues today. It may lead to an actual bitcoin supply shortage, albeit not necessarily one that will catapult prices upward.

Source: CryptoQuant

For the average user, there is no reason to keep BTC on an exchange. Unless one wants to trade or sell Bitcoin, these funds have no business being on a centralized platform. Slowly but surely, more users are getting this message and take action accordingly. There is still a long way to go, however.

One also has to wonder if this supply shortage is a real factor in the industry. More specifically, fewer BTC available on centralized exchanges are only part of the bigger picture. Pushing the value per BTC to astronomic will require some significant changes across the board, including a bigger liquidity dropoff across exchanges. 

Spot Platforms Note Big Dips

Enthusiasts can find the biggest change in BTC holdings on spot trading platforms. Over the past few days, there has been a significant increase in negative netflow. Such a trend indicates more people withdraw BTC from the exchange compared to incoming deposits. This past week, the outflow has become a lot more outspoken, indicating a shift may be happening.

Source: CryptoQuant

Judging by the overall volatility on these exchanges, however, the current outflow isn’t making a significant impact just yet. That situation can change at any given moment, as this industry continues to evolve and grow. All signs point toward a very bullish future for Bitcoin, but nothing is ever guaranteed. 


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