According to Bloomberg, the value of Bitcoin has increased by 32% since the beginning of the year, fueling a prolonged rally and increasing speculative interest in smaller tokens. A net $6.1 billion has flowed into a group of landmark Bitcoin exchange-traded funds (ETFs) that started trading in the US on January 11th, indicating a growing demand for the token beyond dedicated digital-asset enthusiasts. An upcoming reduction in Bitcoin's supply growth and MicroStrategy, an enterprise software company that purchases Bitcoin as part of its corporate strategy, announced on Monday that it had acquired more of the digital asset.
The total value of digital assets now stands at approximately $2.2 trillion. Despite investors reducing expectations for looser monetary policy this year, digital tokens continue to rise, as evidenced by an increase in bond yields. Bitcoin has outperformed traditional assets such as stocks and gold in 2023, with a ratio comparing the price of the token to the precious metal reaching its highest level in over two years.
The significant inflows into Bitcoin ETFs have led some industry observers to warn of an impending supply squeeze as miners struggle to produce enough coins to meet demand. Approximately 80% of Bitcoin's supply has not changed hands in the past six months, potentially exacerbating the squeeze and adding to the upward price pressure. After the token's so-called halving in April, where the block reward for miners will decrease to 3.125 Bitcoin from 6.25 Bitcoin, the overall supply will drop further, and the shortage will reach aggravated levels, according to Julius Baer digital-assets analyst Villegas.