Demand for Bitcoin Is Far Outstripping Supply
As the Bitcoin price keeps surging the demand for Bitcoin is far outstripping new supply. The scarcity of new BTC has led some to suggest we might even have a ‘supply crisis.’
There are 900 BTC mined daily, and 27,000 every month, and while there will always be market sellers, the demand for Bitcoin from the likes of PayPal, Square and Grayscale means Bitcoin’s scarcity has never been more evident.
Square Inc. sold a record 160,000 BTC through its Cash App in Q3, which is up x11 year on year. And the fintech firm led by Jack Dorsey has to maintain enough custody of BTC to keep up with the demand for Bitcoin through its application.
Added with PayPal’s successful entrance into the Bitcoin space, it’s clear that consumer demand for Bitcoin is far outstripping new supply.
PayPal entered the Bitcoin space to mixed reactions from Bitcoiners, with some Bitcoin Maximalists not happy with PayPal’s decision to not offer full custody option for anyone buying Bitcoin through the payment giant.
PayPal enabled limited Bitcoin purchases from their user accounts in the US. The demand for Bitcoin with PayPal was so high, however, that CEO Dan Schulman raised buying limits for BTC, after what he said was ‘two times to three times of what our expectations were.’
It’s without question, there’s a Bitcoin boom among financial services companies globally. And according to CryptoBriefing, investment funds and payment providers offering BTC are selling record quantities.
Investment funds are also buying Bitcoin in huge quantities. Grayscale’s demand for Bitcoin is getting hungrier along with its customers.
Grayscale added 40,000 BTC to its balance sheet in October, a total way higher than 27,000 BTC mined during the same time period. And the biggest Bitcoin investment fund also reported it had broken $1 billion inflows for Q3 2020. A new record.
Demand For Bitcoin Is Far Outstripping Supply
This demand for Bitcoin is far outstripping supply, and it is without question bullish for Bitcoin.
It’s got to the point where Bitcoin’s scarcity might even mean a supply crisis according to Capriole Investments founder, Charles Edwards.
The popular analyst said the demand from the likes of PayPal, Square and Grayscale is leading to a ‘Bitcoin supply crisis’, and said the likely outcome would be ‘huge price moves from Bitcoin.’
Bitcoin Bull, Max Keiser is in agreement with Edwards. The Keiser Report anchor believes the demand for Bitcoin under $100,000 will ensure the supply dries up very quickly. ‘It will be virtually impossible to get your hands on any,’ said Keiser.
Nobody Wants to Miss Out, So Who Will Be Next?
All of this is extra demand for Bitcoin extremely bullish, and everyone from Wall Street to the biggest corporations will be watching the success of companies building around Bitcoin.
It begs the question: Who will be the next big company to offer a Bitcoin service?
Who would bet against being able to buy Bitcoin in Walmart next? You can already buy Bitcoin with Walmart gift cards through Paxful, but does America’s largest retailer want to miss out on the value Bitcoin can bring?
Walmart is no doubt eyeing the success PayPal has enjoyed in its foray into the Bitcoin space. And with the introduction of banking custody for Bitcoin in the US, why would Walmart want to miss out?
Banks custodying Bitcoin is expected from early next year, and according to macro strategist Raoul Pal the government giving banks Bitcoin custody allowance is ‘codeword for prime broking for the hedge funds.’
This means we can expect the hedge funds to enter the Bitcoin space, from as early as next year, adding more pressure to the demand for Bitcoin.
When Demand Outstrips Supply, Bitcoin Price Can Only Go One Way
Fintech firms and investment funds are scooping up Bitcoin at rates never seen before. There isn’t enough new Bitcoin to meet the demands of just PayPal, Square and Grayscale, never mind those we don’t know about yet.
Economics 101 tells us that when demand outstrips supply the Bitcoin price will go up.
Of course, there are people willing to sell BTC, but Bitcoin’s scarcity means it’s getting harder to get hold of.
Max Keiser says people will struggle to buy Bitcoin under $100k. And while many think the former Walls Street trader a bit whacky, he has been telling the world to buy Bitcoin since it was $1.
PayPal is here and competing against others to ensure it has enough Bitcoin. Who will be next? Walmart? Hedge Funds? The truth is, it doesn’t really matter, because they are coming.
And as the Bitcoin price goes up, it will attract even more people and bigger institutions into the space. While I wouldn’t make a Bitcoin price prediction, I would say the next year or two are going to be wild.
