Bitcoin may see a 'supply shock' as available tokens hit their lowest level since 2018 with a potential ETF likely to jolt demand, analyst says

• The supply of available bitcoin to trade on crypto exchanges is at its lowest level in five years.
• That could set up a supply shock with potential approval of a spot bitcoin ETF looming, an analyst said.

The world's largest cryptocurrency by market capitalization might run into a shortage of liquid supply, especially with potential approval of a spot bitcoin ETF poised to boost demand.

The amount of available bitcoin tokens to buy and sell on crypto exchanges has dropped to 2.3 million, the lowest since April 2018, according to Glassnode data. That's down from 2.6 million a year ago.

"To me, that's suggestive of a potential supply shock," Matt Weller, global head of research at Forex.com, told CoinDesk TV on Thursday. "Essentially, there's not too much bitcoin actively liquid in the market that's available for trade."

The supply crunch could set up bitcoin for another price spike. Earlier this week, bitcoin hit $35,000, the highest since May 2022, on hopes that a spot bitcoin ETF would get regulatory approval soon.

Such an ETF would boost demand for bitcoin, further squeezing the limited supply.

"With lower supply in the market, it only takes a small bump in demand — like what we've seen with speculation around the ETF — to really drive price higher at a rapid rate," Weller said.

Contributing to the constrained supply is that millions of bitcoin are being held by original "die hard" crypto investors. Weller estimated that about 3 million bitcoin tokens haven't been traded in 10 years.

But if the price of bitcoin soars, that could relieve supply by nudging some investors to sell.

Unlike a regular currency, the supply of bitcoin was designed to be finite, capped at 21 million tokens. There are currently 19.5 million tokens in circulation.