Bitcoin ETF Demand Draining Supply, Parabolic Move Expected as Supply Dries Up: Bitwise

Prices have not yet surged despite the increased ETF demand. Existing Bitcoin holders are currently meeting this demand through sales, preventing a parabolic price movement. This dynamic resembles the delayed price response seen in gold after central bank purchases increased in 2022. According to analysis, this pattern may trigger a price surge.

Bitwise Chief Investment Officer Matt Hougan has highlighted this pattern, comparing Bitcoin's current supply dynamics to gold's recent performance. Gold prices surged 65% in 2025 after years of sustained central bank buying. Similarly, Hougan suggests that Bitcoin's price could follow a similar trajectory once current sellers are exhausted. As expert analysis indicates, this pattern could lead to a parabolic move.

Why the Move Happened

Institutional buying of Bitcoin has become more structured since the launch of ETFs. This mechanism allows institutions to purchase Bitcoin without dealing with custody issues, aligning with traditional investment compliance rules. As ETFs acquire more Bitcoin, the liquid supply in the market is tightening.

Bitcoin ETFs remove coins from circulation by holding them in trust. This reduces the availability of Bitcoin for short-term trading. As demand continues to outpace supply, the economic pressure on prices is expected to grow.

How Markets Responded

Recent inflows into Bitcoin ETFs totaled $1.42 billion last week, with the largest single-day inflow reaching $844 million. Ethereum ETFs also saw $479 million in inflows, though this activity dipped later in the week. Analysts attribute this trend to institutional re-entry into the crypto market.

Market analysts suggest that the combination of ETF inflows and reduced whale selling indicates a more stable environment. This shift may support a more favorable price trajectory for Bitcoin, though short-term fluctuations are expected.

What Analysts Are Watching

Hougan anticipates that Bitcoin's price will accelerate once existing sellers run out of supply, a pattern seen with gold in 2025. The critical factor is the persistence of ETF demand over the long term. If this continues, Bitcoin could experience a parabolic move similar to gold's recent surge. As analysis shows, this pattern could lead to a significant price move.

Technical analysts also note Bitcoin's current positioning near a critical resistance level. A breakout above $94,000 could lead to further gains, while a breakdown could open the door to lower levels.

Meanwhile, U.S. states like Texas are exploring strategic Bitcoin reserves. Texas has already invested in a Bitcoin ETF and is adapting its bullion storage infrastructure for digital assets. This development may signal a broader institutional adoption trend.

Investors are monitoring the trajectory of ETF inflows and the pace of supply tightening. The potential for a significant price move in Bitcoin remains contingent on sustained demand and a shift in seller behavior. According to recent data, this pattern suggests a strong institutional appetite.