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WARNING: Bitcoin supply crisis is very real!!!

On-chain analyst and chief technology officer at Glassnode, Rafael Schultze-Kraft, says investors are underestimating just how much demand for BTC is outstripping supply.

Rafael Schultze-Kraft points to the number of Bitcoin addresses that have never spent funds and the amount of BTC that’s presumably lost, estimating they account for 5.7 million BTC that’s unlikely to ever be sold.

In total, the analyst says the blockchain intelligence provider’s data shows the vast majority of BTC is held by illiquid entities, and miners that hold large amounts of Bitcoin do not appear interested in selling.

“14.4 million BTC is held by illiquid entities – that is 78% (!) of the current supply. Illiquid entities spend less than 25% of the BTC they receive, acting as supply sinks in the network. Yes, only 12% of the BTC supply is liquid, according to this metric…

Are miners cashing out at these prices? I don’t think so. The amount of miner unspent supply (BTC that has never left the miner address) has been increasing since the last halving. Current miner balance: 1.7 million BTC.”

As institutional investors increasingly enter the market, Schultze-Kraft says liquidity is vanishing from exchanges.

“We’re seeing the longest depletion of exchange funds. Since January, the BTC supply on exchanges dropped a staggering 20%.

BTC is being pulled to long-term storage, custodian wallets, etc.”

Schultze-Kraft says he believes the supply and liquidity crisis is set to fuel an uptrend in Bitcoin’s price for the foreseeable future.

“Bitcoin is in a supply and liquidity crisis. This is extremely bullish! And highly underrated. I believe we will see this significantly reflected in Bitcoin’s price in the upcoming months.”

In other trending Bitcoin News today:

XRP‌ ‌price plunges‌ ‌21%‌ ‌in‌ ‌two days as SEC targets Ripple — What’s‌ ‌next?‌ ‌

XRP price declined by 21% in two days on Coinbase from $0.5695 to $0.4491. The drop was accelerated by reports on Dec. 22 that the U.S. Securities and Exchange Commission (SEC)’s is preparing a lawsuit against Ripple.

Brad Garlinghouse, the CEO of Ripple, said the SEC “voted to attack crypto,” citing a Fortune article. He wrote:

“Today, the SEC voted to attack crypto. Chairman Jay Clayton - in his final act - is picking winners and trying to limit US innovation in the crypto industry to BTC and ETH. We know crypto and blockchain technologies aren’t going anywhere. Ripple has and will continue to use XRP because it is the best digital asset for payments - speed, cost, scalability and energy efficiency. It’s traded on 200+ exchanges globally and will continue to thrive.”

XRP price fell by roughly 13% following Garlinghouse’s tweet as some industry executives expressed concerns about the situation.

Meanwhile, cryptocurrency traders are mixed about where XRP is headed next. Some say that it might not have an immense impact on the price as Ripple faced regulatory hurdles before. Others believe XRP could continue to stagnate as a result.

One of the main discussion points of the reported lawsuit against Ripple by the SEC is the difference between Ripple and Block.one.

Block.one, the company behind the EOS ecosystem, settled with the SEC for $24 million before there was active litigation.

Since Ripple expects to deal with active litigation, the dealings between Block.one and the SEC are different from Ripple’s case. Jake Chervinsky, a general counsel at Compound Finance, said:

“No. The EOS action only dealt with the EOS ERC-20 token on Ethereum, not the EOS native token on the EOS blockchain.

Block[dot]one settled without active litigation, & by then, the ERC-20 token was no longer trading. Here, SEC will allege an actively-traded token is a security.”