Bitfinex Reports Retail Bitcoin Demand Surpassing Available Supply

Digital asset exchange Bitfinex has spotted an interesting trend: grassroots demand for Bitcoin has outpaced supply. Bitfinex’s recent findings come at a time when the apex asset continues to carve strong upward price trajectories amid interest from top industry players. More so, this supply shock indicates the growing appeal of the OG crypto among new market participants despite its high value.

New BTC Buyers Accumulating Faster Than Supply

Analysts at Bitfinex explained that first-time BTC buyers are accumulating the asset much faster than miners are minting. As per the recent report, the combined holdings of small Bitcoin portfolios, including Shrimp (<1 BTC), Crab (1–10 BTC), and Fish (10–100 BTC), are growing at a monthly rate of 19.3K BTC. 

In comparison, the per-month issuance rate by miners since the last halving stands at 13,400 BTC. According to the experts, these entry-level accumulators, who are seen as price-agnostic buyers, could benefit the Bitcoin price.

For context, price-agnostic buyers do not consider the current price of an asset when purchasing. Instead, they focus on other underlying value propositions, such as future trends and market fundamentals.

Bitcoin’s Supply Squeeze Deepens as ETFs and New Buyers Drive Market to Record Highs

The Bitfinex analysts noted that the demand from these new cohorts is sufficient to absorb any fresh supply and that they are constantly scooping up the asset regardless of the price.

This cohort-level accumulation trend supports the broader bullish narrative that new buyers entering the Bitcoin market are price-agnostic buyers and are relentlessly accumulating with limited intervals.

Bitfinex analysts

Interestingly, this trend coincides with Bitcoin’s recent price highs, particularly driven by increased institutional investment. The spot BTC ETF industry continues to command a large portion of the Bitcoin market activity. In fact, US spot Bitcoin ETF inflows reached over $2.7 billion in the past week, surpassing the mined supply in the same period.

Among these investment vehicles, BlackRock’s iShares Bitcoin Trust (IBIT) led a wave of institutional interest in Bitcoin. 

Here’s how the BTC ETF industry fared over the past week:

• IBIT reached $80 billion in assets under management as of Thursday.
• It became the fastest ETF in history to reach that level, achieving it in just 374 trading days.
• IBIT has now overtaken BlackRock’s flagship S&P 500 ETF in revenue generation.
• The total assets held across all 11 spot Bitcoin ETFs exceeded $140 billion last week.

As of now, Bitcoin has surpassed both silver and Amazon to become the fifth-largest asset by valuation, holding a market capitalization of $2.43 trillion. Meanwhile, the first-born asset touched a new all-time high of $123,091 on July 14 before retracing to $117,000 at the time of writing.

Financial commentators have pointed to Bitcoin’s fixed supply cap of 21 million coins as a key value proposition. They also note that the current supply squeeze could push prices higher. 

Bitcoin’s Rally Fuels Caution Over Looming Volatility

Even as the OG coin continues its bullish ascent, some sector commentators caution against a potential impending volatility. Redstone co-founder Marcin Kazmierczak warned that, while many market experts set short-term BTC price targets as high as $140,000, history shows that “parabolic moves” are often succeeded by “sharp corrections.”

Kazmierczak asserted that “volatility remains Bitcoin’s constant companion,” highlighting the large number of leveraged positions lost over the past day as a reminder. According to CoinGlass data, about $430 million in short positions were liquidated as Bitcoin crossed $121,000. 

The Redstone co-founder urged market participants to carefully approach future BTC price milestones rather than being frenzy-driven. He added that it’s important for investors to thoroughly analyze positions, especially given the rising market sentiments.

On Monday, the crypto market’s Fear & Greed Index recorded a fifth consecutive day of Greed, pegged at 74. For clarity, this indicator measures the overall emotional state of investors.

Despite this positive market feeling, Santiment analyst Brian Quinlivan advised caution, adding that a similar surge in optimism preceded BTC price dips in the past. Some analysts have also expressed concern about the debt-leveraged accumulation model adopted by corporate Bitcoin treasuries, questioning its sustainability.