The world’s largest cryptocurrency may be at risk: supply shock as demand from US Spot Bitcoin Exchange Traded Funds (ETFs) has surged well above expectations. In December 2024, the volume of BTC obtained through Spot Bitcoin ETF more than three times the amount mined in the same month, highlighting the grave imbalance between supply and demand.

Spot Bitcoin ETFs pose a risk of a supply shock

In December 2024, US Spot Bitcoin ETFs bought an astonishing 51,500 BTC. On the other hand, according to the data, BTC miners only produced 13,850 coins during the same period data from Blockchain.com. This means that Bitcoin ETFs alone have purchased almost four times that amount BTC miners manufactured and delivered to the market this month.

According to reportsdemand for ETFs in December was extraordinary, exceeding available supply by approximately 272%. The massive one enhance in demand for Spot Bitcoin ETFs has raised concerns about a potential BTC supply shock, with analysts suggesting it could happen soon.

In particular, Lark Davis, a crypto analyst, announced in early December that “a massive supply shock is imminent.” The analyst based this alarming prediction on the significant accumulation of BTC from US Bitcoin spot ETFs. Davis revealed that at one point in December, BTC ETFs purchased 21,423 BTC; meanwhile, miners only mined 3,150 BTC at the same time.

Analyst too excellent that as of December 17, 2024, there were approximately 1,311,579 BTC held in BTC ETFs worldwide. This amount, valued at $139 billion, represents 6.24% of the total BTC supply of 19.8 million. Given this astounding number, Davis predicts that at the peak of the bull market, Spot Bitcoin ETFs could hold 10-20% total BTC supply, raising greater concerns about a major supply shock.

Concentration of BTC spot inflows in December

Data from Glassnode revealed that Spot Bitcoin ETFs saw total net inflows of $4.63 billion in December, almost doubling their 2024 monthly average of $2.77 billion. It is worth noting that Glassnode revealed that the number of people increased Spot Bitcoin ETF inflows was more concentrated in the first half of the month while in the second half outflowsexcept December 26.

No wonder it’s time for this growth and more decline in Bitcoin ETF inflows coincides with December BTC price changes. At the beginning of the month, BTC recorded increasing dynamics, rapidly reaching the level of approx recent ATH over $108,000 December 17, fueled by bull market buzz and rising demand. However, after this peak The price of BTC has seen a pointed declinea decline that coincided with significant outflows from Spot Bitcoin ETFs, according to Glassnode.

Despite a surge in demand for Spot Bitcoin ETFs in December, recent data shows that investors have extended the accumulation trend until January 2025. On January 3, investors bought over $900 million worth of BTC through Spot Bitcoin ETFs. Recently, US Spot Bitcoin ETFs acquired an additional 9,500 BTC worth over $966 million at the current market price.

Featured image created with Dall.E, chart from Tradingview.com