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The world’s largest cryptocurrency may be at risk of suffering a supply shock as demand for United States (US) Bitcoin spot exchange-traded funds (ETFs) has increased far beyond expectations. In December 2024, the volume of BTC acquired through Bitcoin Spot ETF more than tripled the amount extracted during that same month, underscoring the serious imbalance between supply and demand.
Spotting Bitcoin ETFs Triggering Supply Shock Risks
In December 2024, US Spot Bitcoin ETFs bought a staggering 51,500 BTC. On the other hand, BTC miners produced only 13,850 coins during the same period, according to data from Blockchain.com. This indicates that Bitcoin ETFs alone bought almost four times the amount BTC miners generated and supplied to the market that month.
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According informationETF demand in December was nothing short of extraordinary, outstripping available supply by approximately 272%. this huge rising demand for spot Bitcoin ETFs has raised concerns about a possible BTC supply shock, and analysts suggest it could happen soon.
Specifically, Lark Davis, a crypto analyst, announced in early December that “a massive supply shock is imminent.” The analyst based this alarming forecast on the significant BTC accumulation of US Spot Bitcoin ETF. Davis revealed that at some point in December, BTC ETFs had purchased 21,423 BTC; Meanwhile, miners had produced only 3,150 BTC at around the same time.
The analyst also noted That BTC ETFs globally held approximately 1,311,579 BTC as of December 17, 2024. This amount, valued at $139 billion, represents 6.24% of the total BTC supply of 19.8 million. Given this staggering figure, Davis projects that during peak phases of the bull market, Bitcoin Spot ETFs could contain between 10% and 20% of The total supply of BTC, raising further concerns about a major supply shock.
Concentration of BTC spot inflows in December
Data of Glassnode has revealed that Bitcoin Spot ETFs recorded a total net inflow of $4.63 billion in December, nearly doubling its 2024 monthly average of $2.77 billion. In particular, Glassnode revealed that the increase in Detect Bitcoin ETF Inflows was more concentrated during the first half of the month, while in the second half DeparturesDecember 26 being the exception.
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It is not surprising that the timing of this increase and the subsequent decline in Bitcoin ETF inflows aligns with BTC price movements in December. At the beginning of the month, BTC saw upward momentum, skyrocketing to a new ATH above $108,000 on December 17, driven by the bull market hype and increased demand. However, after this peak, BTC price experienced a sharp dropa drop that coincided with the timing of significant outflows from spot Bitcoin ETFs, as reported by Glassnode.
Despite the surge in demand for spot Bitcoin ETFs in December, new data shows that investors have extended their accumulation trend until January 2025. On January 3, investors bought over $900 million worth of BTC through the Bitcoin Spot ETF. More recently, US Bitcoin Spot ETFs acquired an additional 9,500 BTC, worth over $966 million at the current market price.
Featured image created with Dall.E, chart from Tradingview.com
