Bitcoin Liquidity Crunch Could Fuel Fresh Price Surge, Says Sygnum Bank
Bitcoin’s available supply is drying up rapidly, setting the stage for potential price explosions as institutional appetite grows, according to Sygnum Bank’s latest Monthly Investment Outlook.
The Swiss crypto bank reports that Bitcoin’s liquid supply has plunged by 30% in the last 18 months, citing rising institutional adoption and the emergence of large-scale acquisition vehicles such as exchange-traded funds (ETFs) and corporate treasuries as key drivers.
Source: Sygnum These entities have been systematically draining exchange balances, pulling nearly one million BTC off trading platforms since late 2023. The trend is accelerating, fueled by funds raising capital through equity and debt offerings to acquire Bitcoin.
“Bitcoin’s fast-shrinking liquid supply is creating the conditions for demand shocks and upside volatility,”
Sygnum wrote in the June report, highlighting the risk of sudden upward price movements as available supply continues to contract.
Adding fuel to the fire, geopolitical tensions and fiscal instability — including concerns over the weakening U.S. dollar and America’s ballooning debt — are pushing both retail and institutional investors to turn to hard assets like Bitcoin and gold.
Domestically, momentum is building as U.S. states begin to treat Bitcoin as a reserve asset. New Hampshire has already enacted legislation allowing for Bitcoin reserves, with Texas on track to follow suit. Internationally, Pakistan’s government and the UK’s Reform Party — currently leading in election polls — are also exploring similar reserve strategies.
Although these reserve purchases are still at the planning stage, Sygnum noted that once they materialise, they could act as a significant bullish catalyst, not just from a demand perspective, but due to the strong signalling effect such moves would have on global markets.
The report also underscored Bitcoin’s evolving market behaviour. Over the past three years, Bitcoin has exhibited more upward than downward volatility — a reversal from its historical trend — reflecting a maturing market increasingly shaped by long-term institutional holders.
Meanwhile, Ether (ETH) is showing signs of revival after a prolonged period of lagging behind. Sygnum attributed the renewed momentum to Ethereum’s Pectra upgrade , which has triggered revenue growth and reignited interest from financial institutions building tokenization infrastructure on Ethereum and its layer-2 solutions.
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