Key Summary:
The number of Bitcoin held for over 10 years is growing faster than newly minted coins—550 Bitcoins per day compared to 450 Bitcoins issued daily.
Currently, 17% of Bitcoin is considered non-liquid assets, and this proportion is expected to rise to 30% by 2026.
Fidelity Digital Assets recently released a report highlighting key shifts in Bitcoin supply dynamics following the 2024 halving event. The report notes that "ancient" Bitcoin supply (referring to coins held for 10 years or longer) has begun to exceed new issuance, with approximately 550 Bitcoins entering the ancient supply category daily, while new issuance is only 450 Bitcoins.
This trend, combined with the continued buying behavior of institutional investors, raises a thought-provoking question: Can this growing demand push Bitcoin's price to $1 million?
Currently, the ancient supply of Bitcoin accounts for over 17% of the total issuance (3.4 million Bitcoins, valued at $360 billion based on $107,000 per Bitcoin). This reflects the strong conviction of holders, with a daily reduction rate of less than 3%. The report predicts that this proportion could reach 20% by 2028 and 25% by 2034, further tightening available supply.
At the same time, institutional investor funds are accelerating their inflow. Bitwise analysis indicates that under a baseline scenario, Bitcoin inflows are expected to reach $120 billion by 2025 and $300 billion by 2026.
Driving this trend is a diverse range of participants: countries may reallocate 5% of their gold reserves ($161.7 billion, accounting for 7.7% of supply), U.S. states adopting at a rate of 30% ($19.6 billion), wealth management platforms allocating 0.5% ($300 billion), and publicly traded companies doubling their holdings ($117.8 billion). In an optimistic scenario, inflows could exceed $426 billion, absorbing over 4 million Bitcoins (19% of supply), further tightening liquidity.
This institutional accumulation and growth of ancient supply are developing in parallel, indicating that a significant portion of Bitcoin supply may transition into non-liquid assets, which could amplify analysts' price prediction targets due to increased demand.
To reach a price of $1 million per Bitcoin, a market capitalization of $21 trillion is needed, which is a tenfold increase from the current $2.1 trillion. Currently, 19,880,604 Bitcoins have been mined, accounting for 94.66% of the total supply of 21 million. Fixed supply and insufficient liquidity may drive Bitcoin to achieve the next significant milestone.
Historical trends following halving events (2013, 2017, 2021) show that reduced supply growth and increased demand have driven market recoveries, supporting the argument that current market dynamics may lead to similar outcomes.
The impact of ancient supply is evident, with 17% of the supply already in a non-liquid state and expected to continue growing, while liquid supply is decreasing. Analysts note that if institutional investors continue to accumulate, by 2026, 30% of the supply (approximately 6.3 million Bitcoins) could become non-liquid.
However, the market still faces some challenges. After the 2024 U.S. elections, ancient supply decreased on 10% of trading days—nearly four times the historical average—indicating that even long-term holders may choose to sell during market volatility. Similarly, the supply held by five-year holders decreased on 39% of trading days post-election, three times the typical rate, correlating with sideways price movements in the first quarter of 2025.
This suggests that despite the strong non-liquid trend, specific market conditions may still trigger supply increases, potentially slowing the pace of price appreciation.
The Bitwise report notes that due to risk-averse policies from Morgan Stanley and Goldman Sachs (managing $60 trillion in client assets), $35 billion in demand is on hold for 2024. Its bearish scenario anticipates over $150 billion in fund inflows, while the bullish scenario exceeds $426 billion, absorbing 4,269,000 Bitcoins, highlighting the market's immense demand potential.
Therefore, Bitcoin's ancient supply and anticipated institutional fund inflows create a narrative of increasing scarcity in the market. While reaching $1 million is an ambitious goal, the current trajectory suggests it is a feasible price expectation.
Related: Report: "Crypto-native" asset management firms have seen on-chain holdings grow fourfold since January
This article does not contain any investment advice or recommendations. Any investment and trading activities involve risks, and readers should conduct their own research before making decisions.
Original: “Bitcoin (BTC) Supply Squeeze Intensifies as Holders Surpass Daily Mined BTC”
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