Bitcoin Supply Shock: Is The Mother Of All Supply Squeezes Finally Upon Us?
According to analysts, that Bitcoin supply shock we’ve been promised all year is looking more and more likely.
Covered:
- Bitcoin Supply Shock Is Imminent
- Is It Actually Happening This Time?
Bitcoin Supply Shock Is Imminent
Never in the history of the #Bitcoin Network has this large of a percentage of the circulating supply (85.25%) been held for over three months.
Supply squeeze underway. pic.twitter.com/t797t292uC
— ??Dylan LeClair?? (@DylanLeClair_) October 6, 2021
Bitcoin analyst Dylan LeClair tweeted last night that since we are seeing the largest held supply of Bitcoin in the history of the network, a supply squeeze is underway. “This large of a percentage of the circulating supply (85.25%) been held for over three months,” LeClair pointed out.
According to Bitcoin Magazine, the halving event is an example of what leads to a supply shock: “In Bitcoin, the halving events that occur every 210,000 blocks (roughly every four years).” After each halving minor rewards eventually decrease to the point where they stop selling to exchanges. When exchanges get less from miners, but buying increases, that’s when prices go parabolic thanks to a supply shock.
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LeClair’s comments are inline with what other analysts have been saying all year. Back in April, a.k.a. before that crazy May 19th dump, Willy Woo said we were looking at a huge supply shock. “We can see this from tracking the flows of coins out of the exchanges,” Willy Woo said during an interview with Real Vision. “We’ve just seen an unprecedented amount of depletion of that inventory.”
However, those comments came before the unprecedented May dump.
Is It Actually Happening This Time?
What’s different this time around that might point to this supply shock actually happening this time?
Will Clemente, a 19 year old on-chain analyst and proponent of the supply squeeze theory, pointed out Bitcoin’s movement after the May dump.
“In a bear market you have a capitulation event… and then going into the bull market, you have a supply shock… that’s what really propels us into the main phase of the bull market. And on the back end of that, you see supply become liquid again,” Clemente told Anthony Pompliano.
Clemente went on to explain the different between illiquid and liquid Bitcoin. In short, illiquid Bitcoin is Bitcoin that isn’t heavily traded by its owner. And, like LeClair pointed out we are seeing the largest amount of illiquid Bitcoin in the network’s history.
So, if illiquid Bitcoin is truly telling, then we might be moving into the “main phase of the bull market.”
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Text source: CryptosRus
