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Bitcoin’s supply dynamics are shifting dramatically, with demand surging and available sell-side inventory shrinking to its lowest levels in over four years, according to research from Cryptoquant and its analysts.
Bitcoin Market Faces Supply Shock as Sell-Side Liquidity Hits Four-Year Low
This evolving landscape suggests a tightening market that could have long-term implications for crypto traders and investors. Recent onchain data collected by Cryptoquant shows that bitcoin (BTC) demand has been growing steadily since late September, now expanding at a monthly rate of 228,000 BTC.
Simultaneously, accumulator addresses, representing long-term holders who never sell, are increasing at an unprecedented rate of 495,000 BTC monthly. These trends, coupled with record-high bitcoin prices of $108,000 this month, indicate strong investor confidence, underscoring the market’s bullish sentiment.
Cryptoquant further reports that the total USD stablecoin market capitalization, a proxy for liquidity in cryptocurrency markets, has reached $200 billion. This 20% growth since late October highlights increasing capital inflow into the sector. The heightened liquidity aligns with bitcoin’s recent rally, suggesting a direct relationship between stablecoin market trends and bitcoin price movements.
On the supply side, Cryptoquant data reveals that the total amount of bitcoin readily available for sale—spanning exchanges, miners, and over-the-counter desks—has fallen to 3.397 million BTC. This represents a decline of 678,000 BTC so far this year, reaching a level not seen since October 2020. The shrinking inventory is further emphasized by a drop in the liquidity inventory ratio, which measures how many months of demand the current sell-side stock can sustain.
Cryptoquant states:
The liquidity Inventory Ratio– which measures how many months of demand the current sell-side inventory covers–has declined to 6.6 months, compared to 41 months at the beginning of October.
Cryptoquant researchers attribute these shifts partly to market anticipation of pro-cryptocurrency policies under the incoming U.S. administration, including discussions of a potential strategic bitcoin reserve. This confluence of factors highlights the interplay between macroeconomic expectations, liquidity conditions, and on-chain metrics, painting a comprehensive picture of bitcoin’s tightening market.