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Coins leave Exchanges ‘en-masse’ – Bitcoin supply crisis commences

Bitcoin’s rally has been considered by strong growth by long-term holders. Despite the rally, the quantity of BTC on exchanges has strongly declined in recent months.

Analysts believe that this can be credited to institutional players buying Bitcoin for the long haul. These investments are assumed to drive BTC higher over time as the supply of coins on the market decreases.


Analysts speculate that Bitcoin is in the midst of a supply-side crisis as BTC pushes to fresh all-time highs. While some of the recent rallies have extensively been encouraged by derivatives buyers, it has clear that there is a huge amount of BTC being acquired via spot exchanges.

Rafael Schultze Kraft, CTO of Glassnode, shared the chart below on December 21st. It proves the price of BTC and the supply of Bitcoin on exchanges over a macro time frame.

As can be seen, ever since the local highs were noticed during the February rally to $10,500, the number of Bitcoin on exchanges has been in sharp decline. Schultze Kraft and others see this as a sign that Bitcoin is in the midst of a supply and liquidity crisis, which should push prices higher over time:

“Bitcoin is in a supply and liquidity crisis. This is extremely bullish! And highly underrated. I believe we will see this significantly reflected in Bitcoin’s price in the upcoming months. Let’s take a look at the data.”

Chart of BTC’s price action over the past decade with an on-chain analysis of BTC on exchanges from Rafael Schultze Kraft, CTO of Glassnode | Chart from Glassnode, a crypto data source

INSTITUTIONAL BUYING PRESSURE

Some indication suggests that it’s the institutional players that is stimulating this decrease of Bitcoin on exchanges.

Earlier today, MicroStrategy confirmed that it has completed purchasing 30,000 Bitcoin:

“TYSONS CORNER, Va.–(BUSINESS WIRE)–Dec. 21, 2020– MicroStrategy® Incorporated (Nasdaq: MSTR) (the “Company”), the largest independent publicly-traded business intelligence company, today announced that it had purchased an additional approximately 29,646 bitcoins for approximately $650.0 million in cash in accordance with its Treasury Reserve Policy, at an average price of approximately $21,925 per bitcoin, inclusive of fees and expenses.”

This supplements the 40,000 Bitcoin it has already purchased over the past few months.

MicroStrategy is just one of many corporate and institutional clients buying the leading cryptocurrency.

American life insurance company MassMutual confirmed last week that it had bought $100 million worth of BTC. The company was accompanied by other life insurance companies, though the names of these firms were not disclosed.

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