Over 90,000 Bitcoin Leave Open Markets Thanks to Tether and ETF Buys

Major players in crypto and traditional finance are rapidly accumulating bitcoin, setting the stage for a potential supply squeeze. Stablecoin issuer Tether recently purchased 8,888 additional bitcoin worth $380 million in Q4 2022. This transaction, Tether’s third-largest BTC buy to date, brings its total holdings to 66,465 BTC valued at $2.8 billion.

TLDR

• Tether purchased 8,888 more bitcoin worth $380 million in Q4 2022, bringing its total holdings to 66,465 BTC valued at $2.8 billion
• Tether is shifting reserve allocations away from government bonds towards crypto like bitcoin, aiming to allocate 15% of profits into BTC
• Spot bitcoin ETFs collectively hold 650,000 BTC, indicating growing institutional interest and demand
• Parallel BTC accumulation by Tether and spot ETFs could trigger a demand shock in the bitcoin market
• BlackRock’s spot bitcoin ETF crossed $1 billion in volume in 4 days, amassing over 25,000 BTC worth over $1 billion

Tether is strategically shifting its USDT reserves away from assets like government bonds and towards cryptocurrencies like bitcoin. The company now aims to allocate up to 15% of its quarterly profits into BTC, as part of its efforts to diversify. Tether CEO Paolo Ardoino views bitcoin’s limited supply, adoption rates, and growth potential as underpinning its strength as an investment asset.

Meanwhile, spot bitcoin exchange-traded funds (ETFs) that launched in the U.S. last week have seen surging demand from institutional investors. These ETFs have collectively amassed 650,000 BTC so far, a figure that continues rising daily.

Asset management giant BlackRock saw its spot bitcoin ETF cross $1 billion in trading volume within four days. It has accumulated over 25,000 BTC worth more than $1 billion already. To put this pace in context, Tether has been acquiring bitcoin since 2014 and holds just two-thirds as many coins as BlackRock obtained in less than a week.

This parallel increase in bitcoin treasuries by major financial incumbents signals impending demand-supply imbalances. With substantial quantities of bitcoin being absorbed by these institutions, less BTC is available on open markets.

Reduced bitcoin for sale on exchanges could impact price and liquidity. As supplies constrict but institutional demand compounds, a dramatic price surge becomes likely by late 2024.