Bitcoin Prices May Rise Even More Because Of the Apparent Supply Drought


According to the most recent research conducted by the well-renowned analytics company, Chainalysis, the demand for Bitcoin (BTC) is now creeping up to the crypto’s overall supply – indicating a supply drought that propels BTC prices even further.  Looking at it with the ‘supply and demand’ logic, BTC’s massive rise to $18,000 today from the $12,000 a month prior could mainly be attributed to the persisting demand amidst declining supply.

As per the blog post of Chainalysis published today, the supply for BTC indeed expands every day still; however, the actual amount available for purchase depends on whether holders are willing to trade it. Now, more than three-quarters of the overall 14.8 million mined BTC are kept in illiquid assets, which is a kind of wallet that has dealt less than 25% of BTC it has ever held. This means that only 3.4 million BTC are left for buyers to compete for amidst the still surging crypto demand, thus, the rapid increase of its price.

While Chainalysis’ report implies that institutional investors are mainly to blame for the apparent supply drought, crypto investment company Pantera Capital explicitly points to PayPal’s entry into the crypto market as the primary reason for it.

In its latest report, Pantera Capital claims that PayPal’s newly introduced crypto services heavily impacted the Bitcoin shortage. It says that about 70% of all newly-mined BTCs are now being scooped up by the payments giant – claiming that the crypto volume exploded as soon as PayPal went active in the market.

That being said, PayPal’s foray in the crypto bubble is still seen by many as a good thing despite the supply downfall BTC experiences today, mainly because of the exposure the prominent firm can deliver to the crypto having more than 300 million active users worldwide.  



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