The surging institutional demand for spot Bitcoin ETFs in the United States could lead to a severe supply crunch and a "sell-side liquidity crisis" within the next six months, according to Ki Young Ju, CEO of on-chain analytics firm CryptoQuant.

In a thread on X (formerly Twitter), Ki predicted that the rapid rise of Bitcoin as an institutional investment vehicle, coupled with the overwhelming success of spot Bitcoin ETFs, is set to create an unprecedented scenario where demand for Bitcoin outstrips the available supply.

With Bitcoin ETFs already holding close to $30 billion in assets and experiencing the most successful launch in ETF history, Ki warns that if the current inflow trend persists, it could trigger a liquidity crisis by September.

"At this rate, we'll see a sell-side liquidity crisis within 6 months," Ki stated, pointing out that ETFs alone accumulated over 30,000 BTC in the previous week, while known entities like exchanges and miners hold only around 3 million BTC, with U.S. entities accounting for 1.5 million BTC.

Persistent ETF Inflows Weigh on Bears

According to Ki, as long as spot Bitcoin ETF inflows continue, bearish market forces will struggle to gain traction. The analyst emphasized that the sustained demand from ETFs has made it increasingly difficult for sellers to dictate market conditions.

The Grayscale Bitcoin Trust (GBTC), once a major institutional Bitcoin investment vehicle, is now experiencing daily outflows of around $500 million. However, the value of GBTC's Bitcoin holdings has remained relatively stable due to Bitcoin's price appreciation since the ETF launch in January.

Potential for Higher Cyclical Top

Ki suggests that when the tipping point of ETF demand is reached, the impact on Bitcoin's price could exceed market expectations. A sell-side liquidity crisis would limit the availability of sellers and result in a thinner order book, potentially leading to a higher cyclical top for the cryptocurrency.

The analyst also noted the ongoing uptrend in Bitcoin held by "accumulation addresses," which are wallets that receive only inbound transactions. However, these holdings would need to double before the predicted liquidity crisis sets in, as Bitcoin's recent surge to new all-time highs has caused accumulation address holdings to cool off temporarily.