Future of Bitcoin: Static Coins Outpace New Mining

A groundbreaking report from Fidelity Digital Assets highlights a pivotal moment in the Bitcoin landscape: the quantity of Bitcoin that has remained stationary for over a decade now surpasses the new supply produced through mining. This shift marks a significant alteration in supply dynamics, particularly in light of the expected 2024 halving event. This analysis provides a window into emerging market trends and possible future outcomes.

What Drives the Surge in Long-term Bitcoin Holdings?

As of June 8, the average daily number of bitcoins crossing the 10-year inactivity mark reached 566, which outpaces the daily mining of 450 new bitcoins. This suggests that long-term holders are steadfast, with the pool of inactive Bitcoin assets growing faster than the mined supply. HODLers show remarkable resilience in keeping their holdings.

The study from Fidelity highlights that the rate at which old Bitcoin is held diminishes by less than 3% each day. For those holding Bitcoin beyond five years, this rate is approximately 13%, emphasizing the robust holding behavior among seasoned investors.

Since early 2019, Bitcoin stored inactive for 10 years or more has consistently expanded, now totaling around 3.4 million bitcoins. This includes a third possibly linked to Bitcoin’s enigmatic creator, Satoshi Nakamoto, and carries an estimated value of $360 billion.

The rising Bitcoin price hasn’t swayed many veteran investors to sell; over 17% of Bitcoins in circulation have stayed dormant for over ten years, and this share is rising, illustrating a noteworthy long-term commitment.

Is Institutional Interest Affecting Bitcoin’s Supply?

After the 2024 halving, Bitcoin production saw a contraction. The reservoir of ancient coins continually exceeds new creation, tightening the available liquid supply. This holds investor confidence high and indicates a strong tendency to hold.

Post-2024 U.S. elections saw a short-lived dip in ancient supply, surging temporarily to four times the norm. However, the overall trend remains unchanged, favoring growth in old supply. Fidelity’s “ancient supply HODL rate” has stayed positive since April 2024, strengthening confidence in long-term retention.

Projections are optimistic regarding the ancient supply; it may constitute 20% of the total by 2028, possibly rising to 25% by 2034. Including public companies that possess over 1,000 bitcoins could potentially bring this figure close to 30% by 2035. As of early June, 27 public entities collectively hold above 800,000 bitcoins, indicating significant institutional participation.

• Projected growth in old Bitcoin supply could reach 20% of all Bitcoin by 2028.
• Institutional holdings may constrain liquidity, escalating supply shortages.
• Overall Bitcoin availability could plummet to 14.7 million due to existing reserves.

The rigid supply cap of Bitcoin at 21 million could effectively reduce to 14.7 million, driven by static reserves and growing institutional holdings, possibly intensifying scarcity and price surges. This lays bare the critical role of tracking long-term holding trends in influencing liquidity and market price behaviors. Market observers suggest vigilant monitoring to gauge its impact on volatility and overall market dynamics.