Analyst Explains Why Bitcoin Is Still Distant from Experiencing a Genuine Supply Shock

Recently, a contributor analyzed that Bitcoin (BTC) is currently not experiencing a true supply shock. The discussion highlighted various on-chain metrics to suggest that although exchange reserves are declining, significant scarcity for the leading cryptocurrency does not appear imminent.

Bitcoin and Supply Issues

Since April 21, BTC has been fluctuating within a narrow range of $91,500 to $95,800, providing minimal indications regarding its next price direction. Although some experts have noted the possibility of a supply shock driving higher Bitcoin prices, this analysis takes a more reserved approach.

Related Insights

The analysis pointed out that BTC reserves on centralized exchanges (CEXs) have consistently decreased over the previous year. Notably, reserves fell from 2,942,077 BTC on November 11 to 2,490,318 BTC by April 28, indicating a reduction of 15.35% in just five months.

During the same timeframe, Bitcoin’s Realized Capitalization—the total value of BTC based on its last movement price—has risen from $669.32 billion to $883.03 billion, showing an uptick in actual investment in the Bitcoin network rather than mere market speculation.

It has been explained that as BTC becomes more valuable, acquiring approximately 500,000 BTC at current rates could push its price between $130,000 and $140,000. Nevertheless, it is noted that such a move would likely trigger substantial selling from miners. It was emphasized:

This selling tendency might mitigate the decrease in exchange reserves, as historically, miners have a tendency to sell more as prices rise. Thus, even with shrinking reserves, a price jump would likely incite sufficient selling to counterbalance the drop.

The analyst concluded that a genuine supply shock in this market cycle seems unlikely unless there is a substantial influx of capital—enough to increase Realized Capitalization to three or four times its current standing.

Technical Indicators Suggest BTC Breakout

While the chances of a supply-induced rally may be slim, hope remains for the prominent digital asset. Several technical signals are indicating a possible upcoming bullish trend for this cryptocurrency.

Further Insights

Importantly, Bitcoin’s weekly Relative Strength Index (RSI) has recently broken past a long-term downward trendline, suggesting a potential shift in momentum. This could help BTC regain the $100,000 benchmark in the weeks to come.

Moreover, recent on-chain data suggests that short-term holders are resisting the urge to sell their BTC—even at a loss—which could indicate rising investor confidence and a possible bullish turnaround. As of now, BTC is trading at $94,374, experiencing a 0.4% decrease within the last 24 hours.