Bitwise Europe Research Director Andre Dragosch has drawn attention to an escalating issue in the Bitcoin (BTC) market. According to Dragosch, institutional investors are currently acquiring nearly all of the newly issued Bitcoin supply.
Institutional Grabs of New Bitcoin Supply
In a recent post on the social media platform X, Dragosch revealed that approximately 164,000 BTC issued each year are primarily bought by institutional investors. This scenario indicates a significant imbalance between supply and demand.
The situation is exacerbated when considering other major buyers not included in these figures. These include exchange-traded funds (ETFs), governments, cryptocurrency exchanges, and demand from decentralized finance (DeFi) protocols and smart contracts. Dragosch’s observations suggest a more severe supply shortage than most market participants are aware of.
Consequences of Bitcoin’s Supply Shortage?
While the annual issuance of new Bitcoin supply stands at approximately 164,000 BTC, the overwhelming demand from institutions is expected to be much higher. This could further tighten the supply as large-scale buyers like ETFs and governments increase their Bitcoin acquisitions.
Concrete Implications for Investors
Investors should consider the following points:
- Institutional dominance in BTC purchases could push prices higher.
- Limited supply may lead to reduced liquidity on trading platforms.
- ETFs and government acquisitions could further exacerbate supply issues.
According to CoinMarketCap data, out of the total 21 million Bitcoin supply, 19.75 million have already been mined. Not all of this BTC is accessible; estimates suggest that 3 to 4 million BTC are lost, meaning 15 to 20% of circulating supply is inaccessible. This supports the potential supply crisis outlined by Dragosch.
