New research suggests that Bitcoin, currently valued at $70,836, is facing an impending imbalance between supply and demand. The latest "Weekly Crypto Report" by CryptoQuant highlights a growing scarcity of sell-side liquidity, indicating a potential crisis in the market.

The report indicates that Bitcoin's demand has surged, particularly due to the introduction of spot Bitcoin exchange-traded funds (ETFs) in the United States. This increased demand, coupled with a decrease in available supply, could lead to significant changes in supply dynamics by the first quarter of 2025.

According to CryptoQuant's analysis, the liquid inventory of Bitcoin has reached an all-time low in terms of months of demand. They estimate that the current supply of Bitcoin would only be sufficient to meet the growing demand for twelve months, based on data from addresses that are accumulating Bitcoin without any outbound transactions.

However, when assessing the Bitcoin available exclusively on United States exchanges, the supply could only meet the demand for six months. This assessment excludes Bitcoin held on exchanges outside the US, as US spot Bitcoin ETFs are expected to source Bitcoin solely from US entities.

Furthermore, recent data indicates movement of Bitcoin mined in 2010, previously dormant, to new wallet addresses. CryptoQuant CEO Ki Young Ju describes this phenomenon as a "waking up" of old supply, further highlighting the liquidity crisis.

Despite initial predictions of a six-month supply squeeze following the introduction of ETFs, recent weeks have seen fluctuating trends in ETF inflows and outflows. However, the latest data suggests a reversal in this trend, with significant net inflows recorded on March 25, indicating renewed investor interest in Bitcoin ETFs.