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The world’s largest cryptocurrency may be at risk of one supply shock as demand for US Spot Bitcoin Exchange Traded Funds (ETFs) has soared far beyond expectations. In December 2024, the volume of BTC was acquired via Discover Bitcoin ETFs the amount mined in the same month more than tripled, underscoring the serious imbalance between supply and demand.
Spot Bitcoin ETFs cause supply shock risks
In December 2024, US Bitcoin ETFs spot bought an astonishing 51,500 BTC. On the other hand, BTC miners only produced 13,850 coins during the same period facts from Blockchain.com. This indicates that Bitcoin ETFs alone have seen almost four times as much buying BTC miners produced and delivered to the market that month.
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According to reportsdemand for ETFs in December was nothing short of extraordinary, exceeding available supply by approximately 272%. This huge one increase in demand for Spot Bitcoin ETFs has raised concerns about a possible BTC supply shock, with analysts suggesting this could happen soon.
Specifically Lark Davis, a crypto analyst, announced earlier in December that “a massive supply shock is imminent.” The analyst based this alarming prediction on the significant accumulation of BTC US Spot Bitcoin ETFs. Davis disclosed that BTC ETFs purchased 21,423 BTC sometime in December; Meanwhile, around the same time, miners had only produced 3,150 BTC.
The analyst too noted that BTC ETFs held approximately 1,311,579 BTC worldwide as of December 17, 2024. This amount, valued at $139 billion, accounts for 6.24% of BTC’s total supply of 19.8 million. Given this staggering figure, Davis predicts that Spot Bitcoin ETFs could hold 10-20% of the stock during the peak phases of the bull market. The total supply of BTC, raising more concerns about a major supply shock.
Concentration of spot BTC inflows in December
Facts from Glassnode revealed that Spot Bitcoin ETFs recorded total net inflows of $4.63 billion in December, nearly doubling their monthly average of $2.77 billion in 2024. Notably, Glassnode revealed that the increase in Discover the inflows of Bitcoin ETFs was more concentrated during the first half of the month, while the second half took place outflowwith the exception of December 26.
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The timing for this wave and subsequent developments is not surprising decline in Bitcoin ETF inflows corresponds to BTC’s price movements in December. At the start of the month, BTC experienced upward momentum, skyrocketing to one new ATH above $108,000 on December 17, fueled by bull market hype and rising demand. However, after this peak, The price of BTC experienced a sharp declinea decline 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, there is new facts shows that investors have extended their accumulation trend until January 2025. On January 3, investors purchased over $900 million worth of BTC through Spot Bitcoin ETFs. More recently, US Spot Bitcoin ETFs acquired another 9,500 BTC, worth over $966 million at the current market price.
Featured image created with Dall.E, chart from Tradingview.com
