Bitcoin Nears $90,000 as Supply Shock and Institutional Demand Drive Record Highs

Key Takeaways:

• Bitcoin's price rose to nearly $90,000, driven by post-halving supply constraints and strong institutional demand.
• BTC exchange-traded funds (ETFs) saw inflows of 13,940 BTC in a day, significantly outpacing mined supply.
• MicroStrategy announced a new purchase of 27,200 BTC, increasing its total holdings to 279,420 BTC, valued at over $20 billion.

The recent price action of Bitcoin to an all-time high of $89,933 stems from post-halving supply pressures and intensified demand from institutional investors, according to industry analysts. 

BTC prices have risen 30% over the past week, raising Bitcoin’s market cap to $1.73 trillion and pushing the total cryptocurrency market cap above $3 trillion. 

Experts Cite Post-Halving Supply Shock and Institutional Demand as Key Drivers Behind Bitcoin’s Price Rally

Onramp Bitcoin co-founder Jesse Myers believes that Bitcoin’s aggressive price rally is not only driven by Donald Trump's presidential election victory. 

If you're wondering what's happening with #Bitcoin…

Yes, the incoming Bitcoin-friendly administration has provided a recent catalyst…

But, that's not the main story here.

The main story here is that we are 6+ months post-halving.

And that means a supply shock has… pic.twitter.com/XkwPoPxrj2

— Jesse Myers (Croesus 🔴) (@Croesus_BTC) November 11, 2024

Myers identified Bitcoin’s April 2024 halving event, which reduced block rewards from 6.25 to 3.125 BTC, as the primary catalyst behind the price surge. 

He highlighted a “supply shock” due to reduced block rewards, creating an imbalance between available BTC and surging demand.

Bitcoin Halving Historical Pattern/ Source: Myers

“There’s not enough supply available at current prices to satisfy demand,” Myers noted, predicting a “post-halving bubble” based on historical patterns observed after previous halving events in 2012, 2016, and 2020.

Bitcoin exchange-traded funds (ETFs) have also contributed to the demand side, with ETFs in the US alone seeing inflows of nearly 14,000 BTC on November 11, compared to just 450 BTC mined on the same day. 

Myers explained that higher prices are the only resolution to this imbalance, which could lead to a “mania and a bubble.”

Prominent Bitcoin advocate and founder of Professional Capital Management, Anthony Pompliano, reinforced these bullish sentiments, stating that Bitcoin’s new high has attracted widespread media attention. 

Bitcoin is the king and Wall Street loves to put money with the king.

We should expect the asset to continue getting a strong bid through the end of the year.

I discuss with @LizClaman on Fox Business today. pic.twitter.com/8x01ej7HTp

— Anthony Pompliano 🌪 (@APompliano) November 11, 2024

Pompliano remarked that Wall Street investors recognize Bitcoin as the dominant crypto asset, calling it “the king.” 

The current price surge has pushed Bitcoin to an inflation-adjusted all-time high, with analysts predicting continued growth into the new year.

MicroStrategy, led by Michael Saylor, has continued its aggressive Bitcoin acquisition strategy. 

The firm announced on November 11 that it had purchased an additional 27,200 BTC for approximately $2.03 billion, raising its total holdings to 279,420 BTC. 

This acquisition, at an average price of $74,463 per BTC, has boosted MicroStrategy’s return on Bitcoin investments to 26.4% year-to-date. 

The firm’s total BTC investment now stands at around $11.9 billion, making MicroStrategy the largest corporate holder of Bitcoin globally.

Calls for a US Bitcoin Reserve Amid Supply Constraints

Institutional demand remains high, and American financier Anthony Scaramucci suggested that Bitcoin's supply scarcity could prompt the US to establish a strategic Bitcoin reserve. 

“It may feel like you missed it, but you didn’t. It’s early,” he commented, encouraging those without Bitcoin holdings to consider the asset. 

To those not already long #Bitcoin (my opinion, not financial advice): it may feel like you missed it, but you didn’t. It’s early. The U.S. will establish Strategic #Bitcoin Reserve under great Sen. @CynthiaMLummis. Other countries will follow, along with institutional asset…

— Anthony Scaramucci (@Scaramucci) November 12, 2024

Scaramucci predicted that institutional investors and asset managers would soon increase their allocations to Bitcoin.

As of November 12, 94% of all Bitcoin has already been mined or is otherwise inaccessible, leaving only 1.2 million BTC available to meet future demand. 

At press time, Bitcoin trades at $89,170, and the asset’s trajectory suggests that institutional adoption, supply limitations, and halving effects will keep driving prices upward.