Bitcoin Scarcity May Spark Explosive Surge, Bank Study Shows

The liquid supply of Bitcoin has dropped by 30% over the last 18 months, with nearly 1 million BTC leaving exchanges. This reduction in supply could push prices higher if demand holds up. The decrease in available coins means traders must compete for a smaller pool of coins, leading to potential price swings. Institutions and governments are increasingly interested in Bitcoin, with three US states passing or planning to pass laws to reserve Bitcoin and countries like Pakistan and the UK exploring similar options. When institutions buy it, they create immediate demand and signal Bitcoin's value as a store of value. Rising uncertainty over the US dollar and debt worries have driven investors towards Bitcoin, which is being viewed as a hedge against dollar weakness. Since June 2022, Bitcoin's upward moves have been larger than its downward moves, suggesting institutions are confident in holding through small sell-offs. Ethereum is also experiencing a resurgence, with the recent Pectra upgrade spurring more fees and big banks exploring tokenization platforms built on Ethereum. This renewed interest in Ethereum could benefit the entire crypto space and add to overall demand for top coins like Bitcoin.