Bitcoin Faces Supply Shock as Institutional Demand Surges

Bitcoin is on the brink of a significant supply shock that could propel its price to unprecedented levels in the coming months. According to Katalin Tischhauser, head of research at digital asset banking group Sygnum, the limited liquid supply of Bitcoin (BTC) relative to the substantial pools of institutional capital on the demand side is a critical factor that could trigger a price surge. This supply shock is anticipated to have more pronounced effects than in previous cycles, with every dollar of demand potentially translating to $20-30 of additional market capitalization.

Tischhauser points to the decreasing liquid supply of Bitcoin, which has been steadily declining over the past 1.5 years. This reduction is partly due to the rise of Bitcoin acquisition vehicles such as Strategy and Twenty One Capital. Additionally, structural factors such as increased regulatory clarity, macroeconomic pressures, and Bitcoin’s growing appeal as a deflationary asset contribute to a bullish outlook for BTC. The launch of Bitcoin spot ETFs and events like the US elections have already demonstrated this multiplier effect, where large demand has led to substantial market capitalization gains.

The demand for Bitcoin ETFs has remained strong, with only four days of outflows since April 16. This sustained demand, combined with the limited supply, indicates that Bitcoin is entering a phase where institutional backing and reduced token supply may drive long-term price growth. The asset is likely to experience a phase of consolidation, which some analysts describe as a "healthy pause." This pause will allow the market time to absorb recent gains and prepare for the next phase of growth. Some analysts are forecasting much higher price targets, with predictions ranging from $200,000 to $300,000. However, these are forecasts and not actual market data.