Bitcoin Liquidity Crunch Could Fuel Fresh Cost Surge, States Sygnum Bank

Bitcoin’s available supply is drying up rapidly, setting the stage for potential price surges as institutional appetite grows, according to Sygnum Bank’s latest Monthly Investment Outlook. The Swiss crypto bank reports that Bitcoin’s liquid supply has plunged by 30% in the last 18 months, citing increasing institutional adoption and the emergence of large-scale acquisition vehicles such as exchange-traded funds (ETFs) and corporate treasuries as key drivers.

These entities have been systematically draining exchange balances, pulling almost one million BTC off trading platforms since late 2023. This rapid reduction in liquid supply is creating the conditions for demand shocks and upside volatility, with the risk of sudden upward price movements as available supply continues to shrink.

Geopolitical tensions and fiscal instability, including concerns over the weakening U.S. dollar and escalating debt, are driving retail and institutional investors towards hard assets like Bitcoin and gold. Momentum is building domestically as U.S. states consider Bitcoin as a reserve asset, while internationally, Pakistan and the UK’s Reform Party are exploring similar reserve strategies.

While these reserve purchases are in the planning stage, Sygnum highlighted the potential significant bullish impact they could have once materialized, not only from a demand perspective but also due to the strong signaling effect on global markets. The report also emphasized Bitcoin’s evolving market behavior.