Demand outmints supply, who’s to blame?

A dramatic supply crunch is reshaping the Bitcoin market as institutional investors ramp up purchases, hoard millions of coins, and dry up available liquidity.

With daily corporate acquisitions far outpacing mining output, experts warn of a looming imbalance that could redefine Bitcoin’s role from a volatile asset to a strategic reserve. New forecasts predict trillions of dollars in institutional inflows, while long-term holders and governments show no intention of selling.

As centralized exchanges run dry and regulation looms, Bitcoin (BTC) may be on the brink of a structural transformation—one that could permanently limit access to the world’s leading cryptocurrency.

2,000 bitcoins a day?

Bitcoin treasury company Strategy buys over 2,000 bitcoins on average daily, while miners produce only 450 units per day. The real gap is much higher as more institutions join the Bitcoin race. How this impacts the future of Bitcoin remains to be seen, but a new report provides a clue.

UTXO’s Guillaume Girard and Will Owens predict that by the end of 2025, institutions will invest $130 billion in Bitcoin. In 2026, this amount will grow to $300 billion. According to Girard and Owens, the total amount of bitcoins purchased by institutions will hit 4.2 million, which is 20% of Bitcoin’s total supply (if we don’t take millions of lost bitcoins into consideration).

According to the Bitcoin Treasuries website, as of May 2025, 3.35 million bitcoins were held in corporate, state, and various other treasuries. Only nearly 800,000 bitcoins are held on corporate balance sheets now.

How is Bitcoin getting sold off from the circulation?

According to Strategy chair Michael Saylor, the company is not going to sell any of its bitcoins. Assuming Strategy and other entities copying its playbook won’t be selling bitcoins, then we should acknowledge that Bitcoin’s supply is shrinking at an ever-increasing speed.

As governments, along with private and public companies, continue to buy bitcoins without the intention of selling, more coins will disappear from circulation at an ever-growing speed.

CryptoQuant CEO Ki Young Ju claims that Bitcoin’s annual deflation rate is -2.23% thanks to Strategy’s activity. In the first third of 2025, corporations purchased 196,000 BTC while the mined amount is only around 60,044 BTC. The amount acquired by long-term holding companies already outperformed the entire amount of bitcoins projected to be mined in 2025 (164,250 BTC).

As the new Bitcoin treasuries continue to occur (Nakamoto and 21 Capital are the latest high-profile launches), Bitcoin will increasingly lose liquid supply. The market situation may drastically change.

According to the UTXO forecast, 2026 may see less volatility, increased transparency or reserves, and a change of Bitcoin’s role from a seized asset to a strategic reserve asset. Bitcoin-based decentralized finance (“BTCfi”) platforms will allegedly get bigger. The new era may see drastically lower circulation of Bitcoin.

Read more: The rise of BTCFi: From passive asset to financial powerhouse? | Opinion

Much depends on regulation. At least two U.S. bills may seriously impact the Bitcoin sector: the Bitcoin Reserve Act, which suggests that the U.S. should purchase Bitcoin, and the Genius Act, which aims to regulate stablecoins, making it easier for institutions to enter the crypto markets.

Furthermore, if they are adopted, various bills that establish state-level Bitcoin reserves may boost BTC purchasing as well.

Supply shock and possible implications

Centralized exchanges are running out of Bitcoin. In April 2025, its supply on exchanges was the lowest since November 2018. In 2025, exchanges lost 21% of BTC stored on their balances.

Traders move their bitcoins to wallets and don’t seem to be eager to sell them. As of May 2025, nearly two-thirds of Bitcoin addresses have been motionless, at least since the beginning of the year.

While many expect that institutional investors buying millions of bitcoins will push the BTC price up, not everyone believes so.

Investor and trader Willy Woo doesn’t think that an institutional buy influx may drive the BTC price.

He explains that institutional investors buying large amounts of Bitcoin offset risks through parallel respective short sells.

High demand, shrinking supply

Matt Hougan, a CIO of Bitwise, predicts Bitcoin’s price may reach $200,000 in 2025.

He says the gap between increasing demand and shrinking supply will also eliminate the four-year cycles with their several-fold ups and 90% drops.

All in all, the Bitcoin supply shock is already here. Increased buyer pressure in the conditions of dropping supply may make the BTC price more stable or pave the way to new highs.

Selling BTC at a preferred price will be easier; buying it back will become harder. Bitcoin may lose its vulnerability to macroeconomic factors and cement its reputation as a safe haven and strategic asset.

Read more: Ethereum exchange supply drops to 10-year low amid strong whale accumulation — is $3000 ETH price incoming?