
The Bitcoin market is entering a critical phase, and institutions are the main players. Indeed, large financial institutions are now absorbing almost all of the new BTC issued. This discreet but massive strategy could soon upset the market balances, or even cause a shortage of available Bitcoin.
Institutions Capture Majority of New Bitcoins
Approximately 164,000 Bitcoins are issued each year, and almost all of them are directly acquired by financial institutions. This growing institutional demand far outstrips the available supply. This then creates a situation where BTC accumulation by these large players dominates the market. However, demand from other major buyers, such as governments and ETFs, is not even factored in yet.
This constant pressure exerted by institutions on the market only reinforces fears of an imminent imbalance.. With a fixed annual production and a limited amount of BTC in circulation, the current dynamic could quickly turn into a supply crisis. To date, only 19.75 million Bitcoins have been mined, and an estimated 3 to 4 million are irretrievably lost, further reducing the volume that is actually accessible.
A liquidity crisis on the horizon!
The threat of a supply shortage is not just a simple reduction in Bitcoin availability. Indeed, the frenzied accumulation of institutions could have direct consequences on the liquidity of crypto markets. Such a scenario could drive up Bitcoin prices, but also restrict the ability of individuals and small businesses to acquire crypto. The scarcity induced by this institutional concentration would quickly unbalance exchanges, with an increase in prices, and risks of increased volatility.
Moreover, this situation could affect the entire crypto market. If Bitcoin becomes an increasingly scarce resource, traders could turn to altcoins.
The Bitcoin market is at a decisive stage. This race for institutional purchases could, in the short term, benefit large investors with record prices. However, this same dynamic risks creating profound distortions on the liquidity and stability of exchanges.
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