BlockBeats News, June 4th, Swiss bank Sygnum pointed out in a market outlook report released on Tuesday that Bitcoin's circulating supply is rapidly shrinking. The estimated liquidity of BTC supply has decreased by 30% over the past 18 months, and this drastic liquidity drought may set the stage for price volatility to the upside in the coming months.

Analysts wrote in the report: "Against the backdrop of continued demand strength, Bitcoin's liquidity supply is facing severe tightening, creating conditions for a price surge." The report specifically emphasized the surge in Bitcoin ETF inflows, coupled with the increasing openness of various governments to Bitcoin reserves, which is fueling market expectations of a 'demand shock'—an situation where there are too many buyers and too few circulating tokens.

Sygnum data shows that since the end of 2023, over a million BTC have flowed out of exchanges, with ETF institutions and corporate funds being the main hoarding forces. This trend is putting additional pressure on traders, who may face difficulties in closing positions or topping up margins when the market experiences sharp fluctuations due to liquidity constraints.

Meanwhile, the turmoil in the U.S. Treasury market and the weakening of the U.S. dollar are further strengthening Bitcoin's safe-haven properties. The report highlights that the decline in U.S. bond prices and the expansion of federal debt are driving investors back to gold and Bitcoin. The resilience shown by cryptocurrency in these fiscal headwinds indicates that it is emerging as a new choice for hedging tools.