Record-Low Bitcoin and Ethereum Supplies Signal Imminent Price Surge

Bitcoin and Ethereum are currently experiencing historically low levels of active supply, as revealed by data from The Block. The percentage of tokens that have undergone transactions in the past year has reached unprecedented lows for both cryptocurrencies.

During its peak period between March 2017 and 2018, over 59% of Bitcoin’s supply was actively traded. However, in the last year, only 30.12% of Bitcoin’s supply changed hands. Similarly, Ethereum, which witnessed more than 86% of its supply in motion between July 2016 and 2017, has hit a new low, with only 39.15% of its supply being actively traded in the past year.

The decline in active supply is particularly notable for Bitcoin, given that it precedes the anticipated halving of block emission rewards, scheduled for April of the following year. Data from The Block also indicates that the percentage of tokens untouched for three and five years is currently at record lows.

Over the past three years, only 58.58% of Bitcoin’s supply has undergone transactions, compared to the peak of over 73% in late 2019. The five-year active supply has similarly dropped from a maximum of 83% to 70.13%. Despite the increase in inactive coin supply, network transactions are nearing their peak, presenting an intriguing contrast in the cryptocurrency landscape.

As of November 19, 2023, Bitcoin’s hashrate has maintained a robust pace at 468 exahash per second (EH/s), surpassing the intended ten-minute block interval average. The most recent block was processed in just 7 minutes and 37 seconds, raising expectations of a 3% increase in difficulty, marking the seventh consecutive rise since September 19.

With 93.08% of all bitcoins destined for circulation already mined, totaling approximately 19,546,861.78 BTC at block height 817,532, block times have consistently been shorter than the target average of ten minutes. The range fluctuates between 9 minutes and 43 seconds to 7 minutes and 37 seconds, with a median average of 9 minutes and 40 seconds over the last day.

Despite a previous difficulty adjustment, Bitcoin’s hashrate continues to climb, with the seven-day simple moving average (SMA) at around 468 EH/s, slightly below the peak of 475 EH/s achieved on November 5, 2023. Given the sustained rising hashrate and faster block intervals, a 3% increase in mining difficulty is predicted during the next difficulty period scheduled for November 26, 2023.

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Approximately 22,000 blocks remain until the next halving, suggesting the milestone event may occur as early as February or March 2024 due to the accelerated block production rate. However, calculations based on a steady ten-minute block average point to April 20, 2024, as the more likely date. An anticipated 3% jump in difficulty would elevate it to 67.68 trillion from the current 64.68 trillion, posing a significant challenge for miners seeking block rewards. Over the past two months, difficulty has bi-weekly increased, impacting bitcoin (BTC) miners as it reaches a critical point.

The surge in Bitcoin’s hashrate can be attributed to various factors, including the introduction of more efficient mining machines delivering higher terahash per second (TH/s) output. Additionally, a substantial 120% surge in BTC prices since January 2023 has fueled a remarkable 79% rise in hashrate and a more significant increase in difficulty, exceeding 89%.