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๐ŸŽ“ What is bitcoin supply shock and why does it matter?

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Supply shock is defined as something the market may not be ready for.

The notoriety of the bitcoin supply shock now comes from some investors fearing it and others waiting and it appears to be getting closer as the illiquid supply shock index has been rising in a strong uptrend since the start of the year.

What is show shock and why is it so important?

A supply shock is an unexpected increase in the demand for a good or asset that significantly exceeds the available supply. The supply shock of goods is generally seen as something negative that often works against consumers.

But in the case of digital assets like Ethereum or Bitcoin, the supply shock can be considered a good thing for investors because it often leads to an appreciation in the value of the asset.

Illiquid Supply Bitcoin

As Blockware analyst Will Clement pointed out, bitcoin adoption is consistently driven by institutions with a history of low bitcoin spending. If most of the supply is in wallets that tend to store crypto instead of spending it, then the supply available to new traders will decrease over time.

According to the data presented, the average purchase volume by traders and investors has decreased over time due to the increase in digital gold prices and the decrease in supply.

Additionally, the rate of exchange flow, which has been relatively high for Bitcoin in recent months as the whales eventually redistributed most of their holdings above, is another factor that directly affects the volume of illiquid supply in the market.

It is worth noting that, at press time, Bitcoin is trading at $40,544 after rising more than 4% yesterday.

However, the first cryptocurrency is still trading in an ascending range formed since mid-February, despite the positive performance in the short term.

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