Bitcoin Supply: Shrinking and Scarce
Bitcoin’s hard cap of 21 million coins has always been central to its appeal, but by 2025, this inherent scarcity is transitioning from a theoretical feature to a tangible market reality. An impressive 93% of all Bitcoin has already been mined, and critically, since the network’s fourth halving in April—which halved miner rewards—fewer new coins are entering circulation daily.
This fundamental supply constraint is compounded by the behavior of long-term holders, who are firmly retaining their assets, setting the stage for a potential market squeeze.
Long-Term Holders: Supply Drying Up
A growing proportion of Bitcoin’s total supply is now securely locked in cold storage, held by institutional investors, or presumed lost, indicating a significant reduction in liquid supply. Approximately 70% of the Bitcoin supply has remained unmoved for at least a year, a clear signal that market liquidity is drying up.
This trend, combined with increasing demand from spot exchange-traded funds (ETFs), public companies, and even sovereign wealth funds, is tightening the market considerably. Analysts are now warning of a potential “supply shock,” where available Bitcoin on exchanges becomes too scarce to meet demand, potentially triggering sharp price movements.
Saylor’s Strategy: Relentless Accumulation
Michael Saylor, the executive chairman of MicroStrategy, has made Bitcoin accumulation a core mission, transforming his software company into a dedicated BTC holding vehicle since 2020. Through a strategy involving borrowing money, issuing stock, and utilizing company cash, Saylor has relentlessly acquired Bitcoin. As of mid-2025, MicroStrategy impressively holds about 2.75% of the total Bitcoin supply, approximately 582,000 BTC, and continues to buy more each month. This aggressive approach fuels concerns about an impending BTC supply crisis, as fewer coins available on exchanges directly translate to reduced liquidity, especially for new entrants and retail traders.
BTCs Shift
Bitcoin’s evolution from a speculative retail asset to an institutional-grade investment is now unmistakable. The introduction of spot Bitcoin ETFs in the U.S. and other regions has opened new gateways for large financial entities like pension funds, banks, and investment firms.
BlackRock’s iShares Bitcoin Trust (IBIT) exemplifies this trend, averaging $430 million in net inflows per day in late May 2025, culminating in its largest monthly inflow ever at $6.35 billion. When institutions acquire Bitcoin through spot ETFs, the underlying assets are moved into custodial cold storage, further tightening the liquid supply on exchanges.
Market Concentration Concerns
The 2024 halving significantly reduced miner rewards from 6.25 to 3.125 BTC per block, limiting new supply and cutting Bitcoin’s annual inflation rate to less than 1%. This halving occurred amidst surging demand and heightened accumulation by large players, creating a “perfect storm.”
Beyond MicroStrategy, public wallets linked to Grayscale, Binance, and various ETF custodians now rank among the largest holders of BTC. The top 100 addresses collectively control about 15% of the total supply. While critics warn of Bitcoin ownership concentration, others argue this reflects strong confidence, as these “whales” are holding for the long term rather than short-term profit.
Usable Supply Drying Up
While Bitcoin will not “run out” in an absolute sense, a significant “liquidity crisis” can occur when a substantial portion of the supply is held offline in cold wallets or ETFs, rendering it inefficient for active trading. On-chain data already indicates that exchange balances are at their lowest levels in years, dipping below 11% of the total supply by early June 2025—the lowest since early 2018.
This creates a “dry market” prone to increased price volatility, where even small changes in demand can trigger larger price swings due to the thin supply available for trading.
Bitcoin Supply Shock
The anticipated Bitcoin supply shock is not expected to be a single, explosive event where Bitcoin suddenly “runs out,” but rather a slow-burning squeeze that is already unfolding. The confluence of diminishing miner rewards, relentless institutional hoarding, and the steadfast refusal of large holders to sell is steadily building pressure on the available supply.
Whether this pressure triggers a dramatic price spike hinges on continued new demand. If retail, corporate, and national buyers persist in their accumulation, Bitcoin’s limited supply could create a powerful feedback loop of rising prices and even greater demand, testing its scarcity narrative in real-time.
