Sygnum Bank Report: Bitcoin Liquidity Tightening Sets Stage for Future Price Appreciation

On June 4th, Swiss bank Sygnum pointed out in a market outlook report released on Tuesday that the circulating supply of Bitcoin is rapidly shrinking. Over the past 18 months, the estimated liquidity of the BTC supply has decreased by 30%. This drastic liquidity drought may set the stage for upward price volatility in the coming months. Analysts wrote in the report: "Against the backdrop of continuous strong demand, the liquidity supply of Bitcoin is facing severe tightening, creating conditions for a price surge." The report specifically emphasized the surge in Bitcoin ETF inflows and the increasing openness of various governments to Bitcoin reserves, which is fueling market expectations of a 'demand shock' - a situation where there are too many buyers and too few circulating tokens. Sygnum data shows that since the end of 2023, more than one million BTC have flowed out of exchanges. ETF institutions and corporate funds are the main hoarding forces. This trend is putting additional pressure on traders. When the market experiences sharp fluctuations due to liquidity constraints, traders may face difficulties in closing positions or topping up margins. Meanwhile, the turmoil in the U.S. Treasury market and the weakening of the U.S. dollar are further strengthening Bitcoin's safe-haven properties. The report highlights that the decline in U.S. bond prices and the expansion of federal debt are driving investors back to gold and Bitcoin. The resilience shown by cryptocurrency in these fiscal headwinds indicates that it is emerging as a new choice for hedging tools.