There are two key factors affecting the price of Bitcoin: supply and demand. Although the available supply has been declining, the demand has been rising rapidly.
Institutional investors and companies such as MicroStrategy have poured into the market, buying bitcoin in large quantities, increasing demand. At the same time, data shows that the availability of Bitcoin on exchanges has been declining sharply. This has already affected the market.
"Bitcoin is in a crisis of supply and liquidity. This is extremely bullish! And severely undervalued," Glassnode Chief Technology Officer Rafael Schultze-Kraft said on Twitter recently. "I believe that in the next few months, Bitcoin The price of the currency will clearly reflect this."
This year, Bitcoin has risen from a low of $4,000 in March to a new high of more than $24,000 last week, an increase of 500%.
Bitcoin is experiencing a supply crisis
Over time, the total amount of bitcoin has been increasing because more bitcoins are mined every day, but the available supply (also known as liquidity) on exchanges has been declining. This makes it more difficult or more expensive for new investors to buy Bitcoin.
Data from Glassnode shows that since January, the supply of Bitcoin held by exchanges has fallen by 20%. This is a trend that can be seen on all exchanges. Bitcoin may have been sent to long-term storage, custodial solutions or larger investment funds. But crucially, this means reduced tradability.
In fact, less than 13% of bitcoins currently exist on crypto exchanges and can be traded, and bitcoins have increasingly left the exchanges.
In addition, 14.4 million bitcoins (equivalent to 78% of the total bitcoin supply) are held by illiquid entities. Since only 12% of the total Bitcoin supply is held by liquid entities, this indicator shows that 2020 will cause permanent pressure on Bitcoin's liquidity.
Bitcoin's momentum is breaking, and many institutions are involved. As ordinary investors, mining is our best way to obtain Bitcoin! If we go to the exchange to buy coins to stock up, our cost will be 3-4 times higher, because the exchange is a secondary market, but mining is different. The current price of Bitcoin is 150,000 RMB, if you use 150,000 to participate in mining, you can mine 3-4 Bitcoins! According to the current value, you have earned 450,000 to 600,000 yuan. If the currency price rises to 500,000, you have earned 1.5-2 million!
In fact, nowadays, a mobile phone can easily obtain Bitcoin, which is what everyone usually calls cloud computing power mining! It is called cloud mining because users who purchase contract hashrate mining do not have to touch the mining machine. For them, the occurrence of mining behavior is just a few mouse clicks, which is completely virtualized. In terms of threshold and convenience, cloud mining is quite in demand.
Cloud mining is usually a large mining farm that divides its self-purchased miners into smaller computing power contracts according to their computing power, and agrees on different usage periods. The contract that sells computing power in this way is called computing power. With the contract, users can mine by purchasing the computing power contract, thus eliminating the trouble of self-purchasing mining machines and building their own mining farms.
Source:https://bitco.news/bitcoin-demand-is-booming-bitcoin-supply-is-shrinking-2.html