Kraken Report: A Supply Shock Behind Bitcoin 50% Price Surge In October
According to a new report by Kraken Intelligence, a supply shock seems to have contributed to the Bitcoin (BTC) price appreciating by more than 50% in October.
On-chain data suggests a supply shock appears to have contributed to BTC gaining more than +50% month-to-date.
There has been “little profit-taking” from long-term bitcoin holders along with this month’s price rally, the study found. Paired with Bitcoin’s limited and programmatic mining rate, a supply shock appears to have ensued this month, fueling BTC to reach a new all-time high.
One year revived supply, which reflects long-term holder activity, supports the observation that holders are contributing to BTC’s supply shock; on October 18th, BTC’s 1-year revived supply fell to 2,293.5, the lowest level since August when BTC was trading at about $48,000.
Bitcoin’s HODL Waves shows that the number of coins that haven’t moved in the past 6 months (young coins) recently hit a 3-year low of 25.49%, which suggests that long-term holders held through September softness and October’s strength.
Miner supply would point to further holding amongst mining pools, while individual miners realized a relatively modest amount of profit.
On the flip side of the microeconomic string, demand has only grown stronger. Although higher prices generally lead people to supply more and demand less in broad economic activities, the Bitcoin market seems to have its own set of rules. The inelastic supply of BTC leads to a skyrocketing demand as older players refuse to sell and new entrants bid the price higher.
Bitcoin’s Spent Output Profit Ratio (SOPR), MVRV Z-Score, and exchange net position suggest that the bull market cycle may have further room to run despite BTC reaching new all-time highs.
