Bitcoin Faces Sell-Side Liquidity Crisis as Demand Reaches Unprecedented Levels: CryptoQuant

Get ready for a potential Bitcoin sell-side liquidity crisis in the coming months as demand for this digital asset reaches record-breaking levels. Analysts are predicting a shortage in liquid inventory, which could drive Bitcoin’s price higher.

Unprecedented Demand Levels

The monthly demand for Bitcoin has skyrocketed from 40,000 BTC to 213,000 BTC since the beginning of 2024. This surge is measured by the 30-day growth in accumulation addresses, which are addresses that only receive and hold BTC. The increase in demand is fueled by factors such as Bitcoin ETFs in the U.S. and the growth in holdings by large whales.

As demand rises, sell-side liquidity is dwindling. Currently, there are approximately 2.7 million BTC available at sell-side liquidity entities, a decrease from the peak of 3.5 million BTC in March 2020. These entities provide viable assets for investors to purchase BTC, and their decline could lead to a liquidity crisis.

Impending Sell-Side Liquidity Crisis

The current Bitcoin sell-side liquidity inventory may only cover demand for up to twelve months at the current growth rate. If BTC on CEXs outside the U.S. is removed, the inventory could decrease to only six months, further highlighting the potential crisis.