Bitcoin's Shrinking Supply : Will Saylor’s relentless BTC buying cause a supply shock?

Bitcoin's supply is visibly shrinking in 2025, moving from a theoretical scarcity to a tangible market reality. With 93% of the total 21 million BTC cap already mined and the fourth halving in April reducing miner rewards by half, fewer new coins enter circulation daily.

Simultaneously, about 70% of Bitcoin has remained unmoved for over a year, locked in cold storage, institutional holdings, or lost, which tightens liquidity further. This shrinking liquid supply is compounded by rising demand from spot ETFs, public companies, and sovereign wealth funds, setting the stage for a potential supply shock where available Bitcoin on exchanges becomes too scarce to meet demand, potentially triggering sharp price rises.

Central to this supply squeeze is Michael Saylor, executive chairman of MicroStrategy (referred to as Strategy), whose relentless Bitcoin accumulation has become a defining factor. Since 2020, Saylor has transformed his company into a major Bitcoin holding vehicle, employing various financial means—including borrowing and issuing stock—to buy more BTC.

By mid-2025, MicroStrategy holds approximately 2.75% of the total Bitcoin supply, around 582,000 BTC, surpassing the combined holdings of the US and Chinese governments and dwarfing other institutional holders. His aggressive buying exceeds miner output, effectively "synthetically halving Bitcoin" by absorbing more than half of all newly mined BTC each month.

This intense accumulation reduces available BTC on exchanges, decreasing liquidity and raising barriers for retail investors and new entrants. Analysts forecast this could lead to a supply crunch, driving prices higher.

While concerns exist about MicroStrategy’s debt-fueled strategy and its sustainability in a prolonged bear market, experts like economist Saifedean Ammous argue that such concentration of ownership does not threaten Bitcoin's protocol or decentralization, as institutions have no incentive to alter Bitcoin’s fixed supply rules that underpin its value.

Moreover, this trend of corporate Bitcoin treasuries, led by figures like Saylor, is accelerating the path toward hyperbitcoinization—a future where Bitcoin overtakes fiat as the dominant global money.

The combination of halving-induced lower issuance, institutional hoarding, and rising demand is creating a liquidity-driven scarcity beyond Bitcoin’s inherent protocol limits. This dynamic is reshaping Bitcoin’s market structure, potentially intensifying price volatility, concentrating influence among large holders, and redefining Bitcoin’s primary use case in global finance.

It's me, @justmythoughts, an ordinary Hive user looking to make the most of the platform. I will appreciate your support. Follow me for more. Thanks, Gracias :)

Posted Using INLEO