Satoshi Nakamoto's prophecy is coming true: these lost coins are essentially donations to all holders, making the remaining bitcoins even more rare and precious.

Written by: Long Yue, Wall Street Insights

The supply cap of Bitcoin is 21 million coins, but the actual circulating amount may be far lower.

Recently, according to tracking by the data agency "Sound Money Report," multiple on-chain analysis reports estimate that between 2.3 million to 7.8 million bitcoins may have permanently exited circulation due to reasons such as forgotten private keys, hard drive damage, or accidental death of the owners. This means that the current circulating supply of approximately 19.9 million coins may effectively be as low as 12.1 to 17.6 million coins.

Satoshi Nakamoto, the creator of Bitcoin, predicted on the BitcoinTalk forum in April 2010: "Lost bitcoins will only make other people's coins worth a little more. Consider it a donation to everyone." Today, this comment from over a decade ago is evolving into reality on an unprecedented scale.

Irrecoverable Digital Wealth

Unlike traditional assets such as stocks or bonds, there is no "lost and found" in the world of Bitcoin. The famous saying in the crypto world, "Not your keys, not your coins," often translates into the harsher reality of "No keys, no coins."

Once the private key—a unique 256-bit password—is lost, the corresponding bitcoins become "ghost assets" that are visible on the blockchain but can never be accessed. Such cases are not uncommon, for example:

• It was reported that Welsh IT engineer James Howells accidentally discarded a hard drive containing the private key for 8,000 bitcoins in 2013, which is now worth nearly $900 million.

• Former Ripple CTO Stefan Thomas forgot the password for a crypto hard drive containing 7,002 bitcoins and fell into endless despair with only 2 attempts left out of 10.

• There are also cases where significant wealth was lost due to accidental death. Gerald Cotten, the CEO of Canadian cryptocurrency exchange QuadrigaCX, reportedly died in 2018, leaving $190 million of customer funds (including a large amount of bitcoin) inaccessible.

According to various data compiled by Sound Money Report, estimates of these permanently lost bitcoins range from 2.3 million to 7.8 million.

• Ledger cited an analyst's estimate in a report from May 2025, stating that the lost amount is between 2.3 million and 3.7 million, accounting for about 11%-18% of the total.

• Kane Island digital analyst Timothy Peterson estimated in a report from June 2025 that over 6 million BTC are irretrievable.

• A study by blockchain analysis platform Glassnode and ARK Invest in 2023 estimated that about 7.8 million BTC are in a "hoarded or lost" state, although this data may be inflated due to the inclusion of long-dormant "hoarding" addresses, accounting for about 39% of the total supply (as of September 8, 2025, approximately 19.9 million bitcoins have been mined).

Despite differences in statistical criteria, these data collectively point to one fact: there exists a large and growing pool of permanently lost bitcoins.

Invisible "Supply Shock": Underestimated Scarcity

The "invisible supply shock" created by lost bitcoins is far larger than the institutional adoption that the market is currently discussing.

As of August 2025, data shows that all spot Bitcoin ETFs collectively hold about 1.036 million bitcoins, while according to Bitcoin Treasuries, the total bitcoin holdings of the top 100 publicly listed companies globally is about 988,000, with some well-known companies holding portions of bitcoin. Adding the bitcoins held by ETFs and corporations together, the total is about 2.2 million.

This means that even with the most conservative estimate of 2.3 million lost bitcoins, the number of bitcoins permanently exiting circulation has already surpassed the total held by Wall Street and global corporate giants.

While the market's focus remains on how much money has flowed into BlackRock's IBIT fund or how much more bitcoin MicroStrategy has accumulated, a larger and more profound supply contraction is quietly occurring.

The True Market Value of Bitcoin May Be Overestimated by $500 Billion

Using the current mined total of 19.9 million bitcoins as a base, subtracting a median estimate of 5 million lost bitcoins, then subtracting the 2.2 million held by institutions, and assuming that individual long-term investors have "hoarded" about 3.8 million, the actual freely circulating amount of bitcoins available for trading in the market may be only 8.9 million, accounting for about 45% of the total mined. In contrast, the free float ratio of S&P 500 index constituents typically ranges from 70% to 90%.

Therefore, the current media-reported total market value of bitcoin exceeding $2.1 trillion actually contains an "illusion." If we exclude the 5 million "ghost bitcoins," the true market value should be about $1.6 trillion, evaporating approximately $500 billion.

In summary, the scarcity of bitcoin far exceeds its paper setting of 21 million. This "silent deflation" caused by loss, forgetfulness, and death is continuously reducing the actual supply of bitcoin, with an influence and scale that far surpasses the current mainstream financial media's focus.

The market is gradually realizing that this is "more scarce than imagined."

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