"Where did 5 million BTC go?"...Bitcoin, 'circulating supply collapse' begins

▲ Bitcoin (BTC), cryptocurrency wallet/ChatGPT generated image

An analysis suggests that a significant portion of the total Bitcoin (BTC) supply has been permanently lost due to owners losing keys or dying, which will create an unprecedented supply shock in the market.

Matt Hougan, CIO of Bitwise, stated in a report on April 17 (local time) that the actual available supply of Bitcoin is much lower than commonly expected. Hougan highlighted wallets that have remained untouched for about 15 years. He emphasized, "It appears that a significant amount of the BTC in these wallets has become permanently unusable due to lost passwords or the death of the wallet owner." Consequently, the amount actually circulating in the market is significantly lower than the nominal figures.

According to Bitwise's research data, approximately 25% of the total planned Bitcoin issuance is estimated to be lost. This amounts to over 5 million BTC. The 1.1 million BTC reportedly held by its founder, Satoshi Nakamoto, is also likely included in this category. Hougan analyzed that the loss of such a large amount of funds acts as a powerful driver to maximize Bitcoin's scarcity value.

The influx of institutional investors is further accelerating the supply shortage. This is because large asset managers like BlackRock are absorbing a significant amount of market supply through Bitcoin spot ETFs. Hougan warned that a distorted supply-demand imbalance is occurring, where demand is surging while the actual supply available to the market is decreasing. As the available supply shrinks, Bitcoin's price is bound to trend upwards in the long term, establishing a crucial technical foundation.

Investors should not solely focus on the total on-chain supply figures. As the real liquidity decreases, Bitcoin's character as a store of value becomes stronger. Hougan interpreted the historically high proportion of inactive wallets as a positive sign. The more supply that is fundamentally immune to selling pressure, the more robust the price's downside rigidity becomes.

Ultimately, the Bitcoin market is expected to be revalued as it addresses the vast disparity between nominal figures and actual circulating supply. Supply shortages are an inevitable phenomenon as the Bitcoin ecosystem matures. The market has now begun to reflect the true value of Bitcoin, whose scarcity has been proven, in its price. This Bitwise report strongly supports the logical basis for a Bitcoin bull run.

*Disclaimer: This article is for investment reference only and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*