Demand for Bitcoin ETFs Surges, Outpacing Supply by 600%

According to Gayatri Choudry, Quantitative Research Analyst at Bitwise Asset Management, demand for US spot Bitcoin ETFs rose significantly on Tuesday, exceeding the new supply created daily by miners by a remarkable 614%.

The surge in demand for Bitcoin ETFs reflects growing interest among institutional and retail investors to gain exposure to the digital asset without having to manage the BTC itself. ETFs provide investors with a convenient and regulated way to participate in the potential upside of Bitcoin’s price movements, while mitigating some of the risks associated with direct ownership and custody.

The Bitcoin halving, which will take place in less than a month, will reduce the block reward from 6.25 BTC to 3.125 BTC. This event is important because it reduces the rate at which new Bitcoin is generated by half, making BTC scarcer over time. As demand for Bitcoin ETFs continues to rise and outpace new supply, the available Bitcoin on the market is becoming drastically scarce.

The combination of rising demand for Bitcoin ETFs and Bitcoin’s upcoming halving has been the catalyst for the rise in Bitcoin’s price this year, with BTC now up over 55% this year at the time of writing. Since BlackRock initially submitted its spot Bitcoin ETF filing with the US Securities and Exchange Commission, BTC is up more than 173%.

Market participants remain curious to see how Bitcoin will react to the upcoming halving, as this is the first market cycle in Bitcoin history where the price hit a new all-time high before the halving. Historically, it would take a few months for the ‘supply shock’ following a halving to trigger a rise in Bitcoin’s price. But with demand for spot Bitcoin ETFs growing with no end in sight, Bitcoin has already experienced a major supply shock and the new supply of BTC per day is about to be cut in half.

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