Bitcoin Still Far From A True Supply Shock, Analyst Explains

According to a recent CryptoQuant Quicktake post by contributor Carmelo Aleman, Bitcoin (BTC) is “still far from a true supply shock.” The analyst cited several on-chain metrics to argue that despite declining exchange reserves, the leading cryptocurrency is unlikely to face genuine supply scarcity in the near term.

Since April 21, BTC has been trading within a tight range between $91,500 and $95,800, offering few signals about its next directional move. While some analysts have repeatedly highlighted a potential supply shock that could drive Bitcoin’s price much higher, Aleman’s analysis offers a more cautious outlook.

According to Aleman, BTC reserves on centralized exchanges (CEXs) have declined steadily over the past year. Specifically, reserves dropped from 2,942,077 BTC on November 11, to 2,490,318 BTC as of April 28 – marking a 15.35% decrease in just five months.

During the same period, Bitcoin’s Realized Capitalization – a metric that calculates the total value of BTC based on the price at which each coin last moved – has surged from $669.32 billion to $883.03 billion. This reflects an increase in the actual capital invested in the Bitcoin network, rather than market speculation alone.

Aleman explains that as BTC becomes more “expensive,” a purchase of approximately 500,000 BTC at current prices could potentially drive the cryptocurrency’s price to $130,000–$140,000. However, he cautions that such a scenario would likely trigger significant selling pressure from miners. He adds:

This behavior could counteract the decline in exchange reserves, since historically, miners tend to sell more as the price goes up. So even if reserves keep falling, a price surge would likely encourage enough selling to partially offset that drop.

The analyst concludes that a true supply shock in this market cycle is unlikely unless Bitcoin sees a massive influx of capital – enough to push its Realized Capitalization to three or four times its current level.

Despite the low probability of a supply-driven rally, all is not lost for the leading digital asset. Several technical indicators point toward an impending bullish rally for the cryptocurrency. 

Notably, Bitcoin’s weekly Relative Strength Index (RSI) recently broke a long-standing downward trendline, indicating a potential momentum shift. This development could help BTC reclaim the $100,000 mark in the coming weeks.

In addition, recent on-chain data shows that short-term holders are refraining from selling their BTC – even while in the red – which may signal growing investor confidence and a potential bullish reversal. At press time, BTC trades at $94,374, down 0.4% in the past 24 hours.