A recent study conducted by crypto exchange Bybit has raised concerns about a possible shortage of Bitcoin (BTC) on exchanges by the end of 2024 if demand remains consistent. According to the report, if current withdrawal rates persist, which are currently around 7000 BTC per day, reserves could be completely exhausted within the next nine months. The forecasted shortage is closely linked to the anticipated halving event in 2024, which will reduce the production of Bitcoin on each block by half.

Alex Greene, a senior analyst at Blockchain Insights, commented on the situation, stating that the rapid depletion of Bitcoin reserves is setting the stage for a potential liquidity crisis. As reserves continue to diminish, the market's capacity to absorb large sell orders without impacting prices is weakened.

The report highlights that institutional investors have significantly increased their Bitcoin holdings following recent regulatory approvals of spot Bitcoin ETFs in the US, driving up demand amidst shrinking supply. The surge in institutional interest is expected to exacerbate the shortage and lead to price increases after the halving event.

The Newborn Nine ETFs have been acquiring BTC at a rate of approximately $500 million per day, resulting in a withdrawal rate of around 7,142 BTC per day from exchange reserves. With only about 2 million BTC remaining in centralized exchange reserves, Bybit warns that these supplies could be depleted by early next year if demand remains high post-halving.

The upcoming halving will further reduce the mining reward from 6.25 to 3.125 bitcoins per block, limiting the influx of new bitcoins into the market. This reduction in new supply, akin to resource scarcity seen in precious metals, aims to control inflation and boost Bitcoin's value. Consequently, miners are expected to face reduced incentives and higher production costs, potentially leading to a decrease in immediate selling of newly generated bitcoins. This reduction in miner sales will contribute to the scarcity of Bitcoin on public exchanges, further driving prices upwards.

Maria Xu, a cryptocurrency market strategist, highlighted that miners are adapting to higher costs and reduced rewards, with some potentially selling part of their reserves before the halving to sustain operations. However, this could result in a temporary increase in supply before a long-term decline post-halving.

Bybit's analysis underscores the immediate and significant impact of tightening Bitcoin supply on its pricing and investment strategies. Despite the challenges, the exchange remains optimistic about the future, suggesting that the decrease in supply could trigger a "fear of missing out" (FOMO) among new investors, potentially propelling Bitcoin's price to unprecedented levels.