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A Bitcoin supply shock is brewing – Will BTC hit $70K next?

October 27, 2024
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A Bitcoin supply shock is brewing – Will BTC hit $70K next?
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  • Bitcoin’s October gains largely stem from halving-driven supply scarcity.
  • As per AMBCrypto, a supply shock has yet to dissipate.

Bitcoin [BTC] has been consolidating within the $66K-$67K range for the past seven days, currently trading at $67,160 with a slight 0.57% gain from the previous day. This consolidation mirrors BTC’s July pattern, where resistance at $68K led to a swift drop below $55K. Thus, staying within this range is critical to avoid a similar downturn.

Interestingly, October’s gains have largely been driven by a post-halving supply squeeze, bringing fresh scarcity to the market. Now, as BTC wraps up its most bullish month, conditions may be ripe for a supply shock if demand aligns. 

Bitcoin halving impact is yet to materialize

Historically, the post-halving period has acted as a significant catalyst for bullish rallies, particularly from an economic standpoint. As BTC supply tightens, miners are often the most impacted, leading to their widespread capitulation.

In simple terms, as block rewards decrease, miners may find it challenging to cover their operational costs, prompting many to exit the market.

This shakeout leaves only the most efficient miners in the ecosystem, potentially creating a more robust environment for price appreciation as supply diminishes.

Bitcoin halving

Source : X

As evidenced by the chart above, miner reserves have been steadily declining since the April halving, reflecting these dynamics. 

While one might assume this would create selling pressure, the scarcity of BTC among miners – especially as block rewards hit lower lows – has not significantly impacted the market.

If demand remains high, much of the selling pressure is absorbed, creating ideal conditions for a supply crunch.

This environment kept October bullish, with BTC nearly testing $70K. However, a breakout has yet to materialize, indicating that the anticipated supply shock has not occurred.

This scenario maintains optimism for a potential parabolic rally as we approach the end of Q4.

See also  Wall Street's changing stance on Bitcoin: From threat to opportunity!

Efficient miners are still in the game

The effects of the halving are evident: Bitcoin’s mining difficulty has reached an all-time high, meaning it now requires more computational power to process transactions. This situation is forcing out less efficient miners. 

BTC hash rate

Source : Bitcoin Magazine Pro

As a result, the hash rate has also increased, indicating a more secure and robust network. This trend highlights the consolidation of mining operations, where only those with the best technology and lowest costs can survive.

In short, a mass capitulation could still be on the horizon, potentially leading to a significant price increase as available supply dwindles  against persistent demand.

Institutional interest is growing

Currently, all exchanges are seeing a significant increase in BTC reserves, indicating selling pressure primarily from the mining community for the reasons mentioned above.

As noted earlier, a supply shock could materialize if demand remains high despite this pressure; otherwise, a repeat of the July cycle might occur. Interestingly, October has seen a notable uptick in ETF inflows, suggesting growing retail interest.

ETF flows

Source : BGeometrics

Furthermore, BlackRock’s Bitcoin holdings have exceeded 400K BTC, reaching 403,725 BTC, worth $26.98 billion. Over the past two weeks alone, BlackRock has purchased 34,085 BTC, valued at $2.3 billion.

This indicates that institutional demand is surging, reinforcing AMBCrypto’s initial hypothesis of a brewing supply shock.


Read Bitcoin’s [BTC] Price Prediction 2024–2025


While the current consolidation is crucial for preventing BTC from faltering, a consistent balance between demand and supply will ultimately determine whether BTC can reach a new ATH before the end of this quarter. 

Regardless, the miner capitulation highlights the effects of the post-halving environment; their exit now requires a more sustained buying effort at current prices. While a slight retracement may occur, a full-fledged pullback seems unlikely.

 

Next: Why Bitcoin needs 54 million investors to jumpstart its rally

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  • Bitcoin’s October gains largely stem from halving-driven supply scarcity.
  • As per AMBCrypto, a supply shock has yet to dissipate.

Bitcoin [BTC] has been consolidating within the $66K-$67K range for the past seven days, currently trading at $67,160 with a slight 0.57% gain from the previous day. This consolidation mirrors BTC’s July pattern, where resistance at $68K led to a swift drop below $55K. Thus, staying within this range is critical to avoid a similar downturn.

See also  Why Would Anyone Reduce The Supply of Tokens?

Interestingly, October’s gains have largely been driven by a post-halving supply squeeze, bringing fresh scarcity to the market. Now, as BTC wraps up its most bullish month, conditions may be ripe for a supply shock if demand aligns. 

Bitcoin halving impact is yet to materialize

Historically, the post-halving period has acted as a significant catalyst for bullish rallies, particularly from an economic standpoint. As BTC supply tightens, miners are often the most impacted, leading to their widespread capitulation.

In simple terms, as block rewards decrease, miners may find it challenging to cover their operational costs, prompting many to exit the market.

This shakeout leaves only the most efficient miners in the ecosystem, potentially creating a more robust environment for price appreciation as supply diminishes.

Bitcoin halving

Source : X

As evidenced by the chart above, miner reserves have been steadily declining since the April halving, reflecting these dynamics. 

While one might assume this would create selling pressure, the scarcity of BTC among miners – especially as block rewards hit lower lows – has not significantly impacted the market.

If demand remains high, much of the selling pressure is absorbed, creating ideal conditions for a supply crunch.

This environment kept October bullish, with BTC nearly testing $70K. However, a breakout has yet to materialize, indicating that the anticipated supply shock has not occurred.

This scenario maintains optimism for a potential parabolic rally as we approach the end of Q4.

Efficient miners are still in the game

The effects of the halving are evident: Bitcoin’s mining difficulty has reached an all-time high, meaning it now requires more computational power to process transactions. This situation is forcing out less efficient miners. 

BTC hash rate

Source : Bitcoin Magazine Pro

As a result, the hash rate has also increased, indicating a more secure and robust network. This trend highlights the consolidation of mining operations, where only those with the best technology and lowest costs can survive.

See also  Bitcoin's greenhouse emissions drop 52% in last five years

In short, a mass capitulation could still be on the horizon, potentially leading to a significant price increase as available supply dwindles  against persistent demand.

Institutional interest is growing

Currently, all exchanges are seeing a significant increase in BTC reserves, indicating selling pressure primarily from the mining community for the reasons mentioned above.

As noted earlier, a supply shock could materialize if demand remains high despite this pressure; otherwise, a repeat of the July cycle might occur. Interestingly, October has seen a notable uptick in ETF inflows, suggesting growing retail interest.

ETF flows

Source : BGeometrics

Furthermore, BlackRock’s Bitcoin holdings have exceeded 400K BTC, reaching 403,725 BTC, worth $26.98 billion. Over the past two weeks alone, BlackRock has purchased 34,085 BTC, valued at $2.3 billion.

This indicates that institutional demand is surging, reinforcing AMBCrypto’s initial hypothesis of a brewing supply shock.


Read Bitcoin’s [BTC] Price Prediction 2024–2025


While the current consolidation is crucial for preventing BTC from faltering, a consistent balance between demand and supply will ultimately determine whether BTC can reach a new ATH before the end of this quarter. 

Regardless, the miner capitulation highlights the effects of the post-halving environment; their exit now requires a more sustained buying effort at current prices. While a slight retracement may occur, a full-fledged pullback seems unlikely.

 

Next: Why Bitcoin needs 54 million investors to jumpstart its rally
Tags: 70KBitcoinbrewingBTChitShocksupply

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Bitcoin – Here’s what its new ‘5-year low’ means for BTC’s run to $100K

November 16, 2024
Will miner selling pressure be Bitcoin’s hurdle to $100K?
Bitcoin

Will miner selling pressure be Bitcoin’s hurdle to $100K?

November 16, 2024
Bitcoin above $90K – $5.42 billion in profits despite rising sell pressure means…
Bitcoin

Bitcoin above $90K – $5.42 billion in profits despite rising sell pressure means…

November 16, 2024
Next Post
BTC number of individual investors must remain above 54 million

BTC number of individual investors must remain above 54 million

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