CryptoQuant Says Bitcoin Demand Is “Eating” Available Inventory, Here’s How

With the crypto market halfway through this bullish cycle, the amount of bitcoins available for sale is shrinking faster relative to the growth in demand. On-chain analysis by market intelligence firm CryptoQuant revealed that the bitcoin market is currently experiencing a demand shock because demand growth is accelerating and supply is shrinking.

According to a weekly report by CryptoQuant, the apparent demand for bitcoins has been expanding since the end of September at a monthly rate of 228,000 BTC, while the total amount of BTC available for sale on crypto exchanges, over-the-counter tables (OTC), miners, and the Grayscale Bitcoin Trust (GBTC) has dropped to levels not seen since October 2020.

Demand for BTC is eating up supply inventory

The address balance of BTC hoarders, which refers to investors who buy BTC and have never sold any, is expanding at a record pace of 495,000 BTC monthly.

Growth in Bitcoin demand has seen inventory levels on OTC tables decline by the largest monthly volume in 2024 for the first time since April 25. The monthly inventory on Bitcoin OTC tables has fallen by -26,000 BTC this year, with an additional decrease of 40,000 BTC to the level. balance from November 20.

“OTC desks source Bitcoin primarily for institutions and large buyers. If the demand for Bitcoin is outstripping the supply, the Bitcoin balances on the OTC desks will decrease, and vice versa. Right now, their balances are decreasing as the demand exceeds supply,” CryptoQuant said.

Sell-side liquidity falls to 2020 levels

As demand continues to rise, so does industry liquidity. The total market capitalization of USD-based stablecoins recently surpassed $200 billion for the first time, representing an increase of 20% or $35 billion since the end of October. This reflects an influx of liquidity and fresh money into the crypto market. The growth also coincided with BTC’s recovery above $100,000 to $108,000. The crypto asset was worth $96,700 at the time of writing, according to data from CoinMarketCap.

Additionally, bitcoin selling liquidity is now around 3.397 billion BTC, the lowest level in more than four years. This liquidity has further decreased by 678,000 BTC so far this year, greatly reducing the potential for selling pressure.

Also, the liquidity inventory ratio, a metric that measures how many months of demand is covered by current sales inventory, fell to 6.6 months from 41 months at the start of October. CryptoQuant explained that a decrease in the sell inventory ratio coincided with the BTC rallies witnessed in the first and fourth quarters of 2024.

SPECIAL OFFER (Sponsored) Binance Free $600 (Exclusive to CryptoPotato): Use this link to register a new account and receive an exclusive welcome offer of $600 to Binance (full details).

LIMITED OFFER for CryptoPotato readers on Bybit – Use this link to register and open a FREE $500 position with any currency!