- Institutional investors have poured over $1 billion into crypto investment products in 2023, with Bitcoin receiving the majority of new inflows
- On-chain data shows Bitcoin supply is decreasing right before the next halving, as more entities accumulate and hold BTC long-term
- The combination of growing institutional demand and tightening Bitcoin supply could lead to a supply squeeze and fuel a new crypto bull run
The crypto market is seeing a resurgence in 2023, with major inflows into Bitcoin, Ethereum, and altcoins. Institutional investment products have attracted over $1 billion in new capital, while on-chain data shows Bitcoin supply dynamics could lead to a supply squeeze.
Institutional Investors Pour Over $1B Into Crypto
Inflows into crypto investment products have exploded in 2023. According to CoinShares, digital asset investment products saw inflows of $293 million last week, bringing the 7-week total above $1 billion. This makes 2023 the third-highest year ever for inflows, with year-to-date inflows hitting $114 billion.
The excitement is being driven by the possible approval of the first Bitcoin spot ETF in the US. Since November 2022, the total crypto market cap has increased by $600 billion. The assets under management (AUM) for crypto exchange-traded products (ETPs) have nearly doubled since January, now sitting at a record $443 billion.
Bitcoin Leads the Charge
Bitcoin has attracted the lion’s share of new investment, with inflows totaling $240 million last week. This pushes Bitcoin’s year-to-date inflows to $108 billion. Ethereum has also seen significant interest, as investors bet on altcoins to outperform Bitcoin.
Overall, the data shows a positive change in investor sentiment after the turmoil of 2022. Crypto is again attracting mainstream capital.
On-Chain Data Hints at Impending Bitcoin Supply Squeeze
With the next Bitcoin halving now just five months away, on-chain analytics firm Glassnode reports that Bitcoin being locked in storage is outpacing new supply by 24x. This reduces liquid supply right before new BTC production gets cut in half.
Bitcoin held by long-term holders has exploded in 2023. More entities, both large and small, are accumulating BTC and holding for the long term. This combination of growing demand and reduced supply could create ideal conditions for a supply shock.
Conclusion
After a brutal bear market, there are finally green shoots in crypto. Billions in capital is flowing back into Bitcoin and major altcoins. And with the halving approaching, Bitcoin’s supply dynamics suggest institutional inflows could be just the start of a new bull run.
