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- Individual investors own most of Bitcoin, while institutions and governments hold a small percentage.
- Institutional demand is rising as Bitcoin supply shrinks, and if OTC markets run out, prices could increase significantly.
A recent analysis by Bitwise Asset Management reveals that individual investors control the majority of Bitcoin’s total supply, raising concerns about a potential supply shock as institutional demand continues to grow. Private holders possess 69.4% of all 21 million BTC, so companies and governments seeking to buy Bitcoin may encounter rising difficulty acquiring it.
Bitwise reports that 7.5% of Bitcoin’s supply is considered lost, while exchange-traded products (ETPs) and funds collectively hold 6.1%. The report also reveals that 4.6% of Bitcoin’s supply exists in wallets linked to Satoshi Nakamoto, and 5.8% belongs to businesses and governments.
Institutions aiming to purchase Bitcoin must mostly acquire their supply from single-person Bitcoin holders who want to sell. According to Bitwise CEO Hunter Horsley, steady corporate and fund acquisition has not led to any positive price changes in Bitcoin. According to Horsley, each new buyer needs to locate a willing seller within the market framework because market dynamics play an essential role.
Every new buyer must find a seller.
Obvious but important as ever.
As witnessed with many days of corporates and ETPs buying but price declining — much of price will be in the hands of individuals who hold Bitcoin. https://t.co/6qYHYklmQr
— Hunter Horsley (@HHorsley) February 10, 2025
Rising Institutional Demand Could Accelerate Supply Shortages
Meanwhile, on-chain data indicates that only 5.7% of Bitcoin remains to be mined. The supply of Bitcoin for purchase in over-the-counter (OTC) markets, which institutions use to acquire large amounts without market price interference, currently stands at a low level. Based on recent reports, the available Bitcoin supply in OTC markets now stands at 140,000 BTC, heightening concerns about scarcity.
Institutional interest in Bitcoin continues to grow, further contributing to supply pressures. The Bitcoin ETFs acquired 50,000 BTC within January, but price fluctuations remained stable, according to the market analysis. Institutional buyers obtain their Bitcoin from OTC markets instead of exchanges to suppress any unexpected price fluctuations.
The reduction in OTC market supply will potentially compel substantial investors to acquire their Bitcoin directly from exchange platforms. Market experts predict that each additional billion dollars entering Bitcoin could drive its price up by 3-5%. If institutions continue their current rate of accumulation, Bitcoin’s supply shortage could intensify.
MicroStrategy, now known as Strategy, has continually pursued an active acquisition plan for Bitcoin. The company acquired 7,633 BTC on February 10 through an investment of $742.4 million. This marked the company’s fifth Bitcoin purchase of 2025. Strategy maintains 478,740 Bitcoin worth more than $47 billion based on information from Saylor Tracker.
Bitcoin Adoption and Supply Shock Risks
Other financial giants like BlackRock are also expanding their Bitcoin holdings. According to Arkham Intelligence, the firm reportedly acquired $1 billion worth of BTC in January and has continued buying, including a recent purchase of 227 BTC.
The potential for a Bitcoin supply shock comes as adoption continues to accelerate. BlackRock previously reported that cryptocurrency adoption has outpaced that of the internet and mobile phones, reaching 300 million users in record time.
As highlighted in our previous news, Coinbase CEO Brian Armstrong predicts that Bitcoin will gain more than several billion users by 2030 based on its ongoing growth rate. The timeframe for Bitcoin adoption depends on its definition, but according to his assessment, the general path toward adoption remains clearly visible.
As more institutions and governments recognize Bitcoin as a viable asset, competition for its limited supply is expected to intensify. If institutional buyers continue acquiring large amounts and OTC markets run dry, the likelihood of a supply shock and subsequent price surge may increase.
