Bitcoin Exchange Balances Hit Rock Bottom: Are We On The Verge of A Major Bull Run?

Amid anticipating the major post-Havling rally, Bitcoin (BTC) exchange reserves have hit an unprecedented low, falling below $2 million. This trend is particularly noteworthy as it signals an impending price for BTC.

Thomas Fahrer, co-founder of Apollo, echoed this in his recent post on the social media platform X, noting that the dwindling BTC exchange reserves could be the harbinger of a significant uptick in price, particularly with the anticipated influx of ETF flows.

Bitcoin Outlook: A Bullish Signal

In his post on X, Fahrer emphasized that Bitcoin’s current low levels on exchanges could spark a parabolic price surge, driven by a potent mix of “Demand shock + Inelastic supply.”

#Bitcoin Exchange Reserves are at all time lows.

Right on time for a second wave of ETF Flows.

Demand shock + Inelastic supply =

— Thomas | (@thomas_fahrer) May 20, 2024

His comments reflect a growing optimism among investors who view the plunging exchange supply as an indicator of an upcoming bullish market phase. This trend, particularly, suggests that numerous investors are transferring their BTC off exchanges, likely opting to hold them long-term in anticipation of rising prices.

Furthermore, the evolving dynamics in BTC’s exchange supply are part of a larger pattern that includes substantial institutional interest, fueling speculation about a forthcoming second wave of ETF inflows.

Such inflows are expected to diminish the available supply of BTC further, exacerbating the supply squeeze and potentially driving prices upward.

Institutional players, including hedge funds and public pensions, are increasingly accumulating through ETFs. This trend marks a significant shift in how traditional financial entities perceive these assets.

For instance, Thomas Fahrer points out that Horizon Kinetic Asset Management has made a significant commitment to BTC. The firm has invested $913 million in IBIT and GBTC, representing approximately 14% of its total $6.5 billion in assets under management.

Forget 2-3% Allocation.

Horizon Kinetic Asset Management has $913M of #Bitcoin invested in IBIT + GBTC making up 14% of their $6.5B AUM

This is investing.

— Thomas | (@thomas_fahrer) May 20, 2024

This massive allocation highlights the growing confidence that major institutions have in the future of BTC.

Retail vs. Institutional: A Divided Market

While institutional investors pile into BTC ETFs, retail investors seem more cautious. Bitcoinist recently cited IntotheBlock’s report revealing a bifurcated market where hedge funds and pension funds actively increase their BTC holdings through ETFs. In contrast, the average investor remains on the sidelines.

This division is highlighted by the recent activities of whales (large investors) who have added 250,000 Bitcoins to their holdings, returning their total to levels seen before the FTX collapse in 2023.

Hedge funds, expected to be major players in institutional adoption, have not disappointed. Firms like Millennium Management have invested billions in BTC ETFs, showcasing their belief in the cryptocurrency’s potential.

Public pensions are also entering the fray, with the state of Wisconsin investing $160 million in Bitcoin ETFs. This move highlights the growing acceptance of BitBTCcoin in traditional investment portfolios.

Moreover, Morgan Stanley’s recent filings reveal significant investments in the Bitcoin ETF market. The bank has purchased 31,712 shares of Ark’s 21Shares ETF (ARKB) and allocated $269 million to the Grayscale Bitcoin Trust (GBTC).

These investments have made Morgan Stanley the third-largest holder of GBTC shares and a top 20 investor in Ark’s ETF, indicating strong institutional interest in BTC.

Featured image from Unsplash, Chart from TradingView