Worried about a Bitcoin supply crisis? Well, you can take a deep breath! A fresh report from CEX.IO is here to ease your fears, suggesting that a supply shock in 2025 is pretty unlikely.
What is the Bitcoin supply shock, and it’s a big deal?
With Bitcoin making a big debut in traditional finance and chatter about a U.S. strategic reserve for BTC, some are predicting a major supply shock that could shake up the usual four-year cycle and send prices to the Moon.
But CEX.IO’s report says those worries might be overblown.
The report dives into the behavior of long-term holders after Bitcoin’s halving event, as historically, these halvings lead to coins shifting from long-term holders to short-term traders, which actually boosts market liquidity.
In 2024 alone, LTH supply dominance dropped by 9%, releasing 1.58 million BTC into circulation.
If history repeats itself, we could see another 1.4 million BTC transition from LTH to short-term holders in 2025, and this means that any increased demand from institutions or governments will likely be met with profit-taking by LTHs, keeping supply issues at bay.
ETFs and market dynamics
While ETFs are often blamed for potential supply shocks, the reality is a bit different. In 2024, U.S. spot Bitcoin ETFs accumulated over 1.13 million BTC, but most of this came from cash-and-carry trades rather than direct investments, and these strategies help balance supply and demand without putting pressure on the spot market.
Plus, ETFs currently make up less than 4% of Bitcoin’s total trading volume, which means they’re not likely to cause any major disruptions.
Also, market liquidity is looking good! While exchange-held Bitcoin reserves indeed hit record lows in 2024, most of those withdrawals were just transfers to cold storage, not hoarding by whales.
OTC platforms even increased their holdings by over 200,000 BTC, showing that liquidity is being redistributed rather than drained.
The future is still bright, no matter what
CEX.IO’s report paints a quite nice picture for Bitcoin’s future, because with improving liquidity conditions and a strong supply ecosystem, it seems we’re set for steady growth rather than chaos in 2025.
The report suggests that instead of a dramatic supply shock, we can expect measured, sustainable progress within the established four-year cycle framework.
