02 May 2022

Be careful not to fall for the supply shock narrative

We have created a liquid tradeable BTC proxy, including ETPs, close-ended funds, and tokenized BTC. Its peaks coincide with the 2021 rallies. It currently sits at 20.4%, a sizable difference from the current exchange balance share of 13%.
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Source: Glassnode, Skew, Dune, MicroStrategy, Tesla, Square, Meitu, Aker, Bytetree, VanEck, Proshares, Hashdex, StatusInvest
On Thursday last week, we published an article exploring and providing context to why traders should be cautious when interpreting on-chain narratives covering bitcoin.Since April 2020, the exchange balance has been in a steady and sustained decline, falling from 17% of the circulating supply to 13% leading many to entertain the thought of a supply shock in bitcoin, which should cause the BTC price to increase in the future. In our article, we highlighted the growth of exchange-traded bitcoin vehicles, tokenized bitcoins, and other, more loosely related assets with BTC exposure to illustrate that bitcoin is indeed far more abundantly available to trade than what exchange balances might suggest.Our estimates push the liquid tradeable bitcoin supply above 20%, far higher than what seems to be the tradeable supply based on pure on-chain analysis.
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