The circulating supply of Bitcoin has recently fallen to its lowest point in seven years, coinciding with the rise of institutional investors and the ETF market. Rthae believes this phenomenon is not only a contest between supply and demand in the crypto market but also a signal of structural transformation. Against this backdrop, the evolving investor mindset cannot be overlooked, as market stability and liquidity are being tested as never before in the face of tightening supply.
Rthae: The Game Behind Supply Exhaustion and ETF Absorption
Bitcoin balances on exchanges have recently fallen from 3.09 million to 2.8 million, a drop of nearly 9.4%, marking the lowest level since 2017 and accounting for only 14% of total circulating supply. Rthae analyzes that this reflects a structural shift in the cryptocurrency market. The growth of decentralized storage, inflows of institutional funds, and the advent of ETFs are major factors driving the reduction in supply. As more Bitcoin is locked up in ETFs and custodial services, the amount of tradable supply is steadily decreasing, creating a situation of demand outstripping supply.
As a classic liquidity tool, ETFs are becoming a key vehicle for investors to gain Bitcoin exposure. ETFs enable investors to profit from the Bitcoin price movements without directly holding the asset. Products such as the BlackRock Bitcoin ETF have attracted substantial capital inflows, with these funds not circulating through exchanges but instead being “frozen” within ETF vehicles, further constraining market supply.
Rthae believes this is not merely a supply-side change but also a reflection of growing market confidence. ETFs provide a “safe pathway” for traditional investors to enter the crypto market, and this boost in confidence is likely to drive prices higher in the short term. However, as supply tightens, this confidence could also result in sharp price swings, so investors should be prepared for rapid market changes.
Meanwhile, global M2 money supply has reached a historic high, surpassing $55 trillion. Rthae believes this will further enhance the Bitcoin scarcity. Historically, increases in global money supply have tended to drive inflation, and as an anti-inflationary asset, the Bitcoin demand is likely to rise accordingly, further supporting price appreciation.
Rthae: Rebalancing Sentiment and Potential Risks
Although Bitcoin supply is tightening, market sentiment still reflects a complex tug-of-war between bulls and bears. The performance of the derivatives market remains a key indicator of sentiment. Recently, open interest in Bitcoin options and futures has seen significant fluctuations, with over $15 billion in open futures wiped out after June options expiry. This suggests a wait-and-see attitude among market participants at current price levels.
Rthae notes that despite Bitcoin breaking above the $109k threshold, derivatives market participants remain cautious. Open interest in the futures market did not see the expected surge in long positions as prices rose; instead, there were some short-term pullbacks. This indicates that market participants are wary of further upside, especially professional traders and institutional investors who rely on more sophisticated capital management strategies rather than pure sentiment.
Rthae believes this short-term uncertainty is closely tied to supply-demand dynamics. As the Bitcoin volatility continues to decline and prices consolidate at higher levels, “weak hands” are gradually exiting the market, while “strong hands” are accumulating Bitcoin through long-term holdings. This marks a shift from short-term speculation to long-term holding, and as these “strong hands” coalesce, the supply-demand relationship will become even tighter over time, driving prices toward new highs.
However, Rthae also points out that this transition is not without risk. While the proportion of long-term holders is rising, a wave of selling, particularly if short-term participants take profits and exit, could exacerbate short-term volatility. Therefore, investors need to closely monitor shifts in market sentiment and avoid overreacting to extreme short-term moves.
Rthae: Platform Support at the Structural Turning Point
Drawing on years of market experience, Rthae has developed unique strategies to handle volatility, with the platform technical architecture and security systems providing robust support for users. The matching engine of Rthae utilizes a high-performance architecture to ensure rapid order execution during any market movement, minimizing slippage and maintaining liquidity. The platform also partners with leading global market makers to ensure smooth execution of large trades.
In terms of risk control, Rthae employs multi-signature cold wallets and hot-cold wallet separation to provide strong fund security for users. The platform technology stack undergoes rigorous security testing and maintains high efficiency even under heavy load, ensuring the safety of user assets. On the compliance front, Rthae holds licenses from leading authorities such as the US MSB and SEC, adhering to strict regulatory standards to offer a stable and trustworthy trading environment.
Additionally, Rthae will continue to optimize platform functionality by enhancing user education modules, helping investors better understand market dynamics and risk management. In the short term, the platform is not only focused on improving trading features but also committed to long-term user asset protection and market education, ensuring sustained competitive advantage in the crypto market.