Bitcoin (BTC) indicates the behavior of “DEFL”. Yes, with quotes. Not because that monetary policy has changed, but because this is still the same since it was created, and there is increasingly fewer BTC circulating. And that shortage is not due to the fact that there are fewer coins issued, but the growth portion of supply is being absorbed by agencies that have no sales plans (or at least they have said so far demonstrated).
In recent months, new phenomena have been integrated. The supply of BTC available outside of MicroStrategy (now famous strategy) has begun to decline.
This is demonstrated by the following graph and provided by the cryptographic analysis company. A sustained decline in total BTC offers excluding strategic holdings. This actually means that the BTC operating market is smaller, i.e. what you can buy or use.
The main cause is aggressive accumulation through strategies. The company led by Michael Saylor already has over 555,000 bitcoins. And most importantly, these Bitcoins are long-term reserves.
From technology, Bitcoin’s monetary policy remains the same. Limited broadcasts, half every four years, offerings up to 21 million. That hasn’t changed. Strictly speaking, Bitcoin remains anti-inflammable (this is not the same as deflation). yes What has changed is the structure of demand and the profile of Hodler..
The strategy is to buy BTC faster than mine. Half of April 2024, the daily broadcast is approximately 450 BTC. If a company earns an average higher than that number, it absorbs more than 100% of its new offers. In addition to other institutional owners with the “permanent HODL” occupation, the results are clear. There are less and less left in the rest of the market.
So, while Bitcoin is not deflately in the classic sense, it means there is no reduction in total circulation – the current operation is similar to the operation of deflation sets. A decline in available offers creates perceived shortages that can have similar effects on financial contractions. There is upward pressure on prices and growing competition due to still in circulation.
Cryptoquant CEO Ki Young Ju has donated to a powerful reading saying, “Bitcoin is deflationary.” His estimates indicate that only the holding of the strategy implies a “deflation rate” of 2.23% per year, taking into account that these Bitcoins are illegal and do not assume they will not return to the market. “If you add other stable institutional owners, it certainly gets higher,” he added.
The graph accompanying that statement (the same as the published internal image above this text) makes it clear: From mid-2023 onwards, supply from the strategy will begin to decline, not just stagnate. It will become deeper in 2024.
The operating market narrows as more BTC is removed from distribution by actors with a long-term vision. That means that even small demand movements can generate amplified price responses.
And there’s something else. Bitcoin owner profiles have changed. It is no longer just an individual investor or a visionary engineer. It now has funds, businesses, banks, and even government. Everything has an institutional structure that supports storage rather than spinning. As a result, more and more BTC is “fixed.”
Cryptonoticias reported that at least 10 public and private contributors added more Bitcoin to the Treasury in April alone.
What we see today could lead to a redefine how Bitcoin is analyzed. Until now, the focus has been on total emissions or annual inflation. but Perhaps it’s time to prioritize clearer metrics: Liquid offer.
Not all BTCs exist are actually available. There are 3-4 million people who have lost Bitcoins. This includes BTC due to Nakamoto AT (are probably being moved), and BTC now owned by companies such as Strategy. It all leaves behind more and less operational fractions.
In that context, traditional indicators can become obsolete. The key is not only how many bitcoins exist, but how many people are in the market..
Accumulation of strategies and other institutional actors Bitcoin papers are strengthened as digital gold. Not only because of its structural rarity and resistance to inflation, but also because of its increased illiquidity. Just as much of the world is kept in safes, it is stored in safes where it cannot be seen again, BTC finds a “permanent home.”
This could be the future of Bitcoin. It is an increasingly difficult value reserve accumulated by people who have arrived earlier or first understood. And even if it’s not written in the code, it’s defl taken away by facts.
The phenomenon of “functional deflation” in Bitcoin causes clear profit scenarios, but also potential risk scenarios that should not be underestimated.
In terms of profit, the most obvious is that it is explained in the price already explained. If the offer is reduced, each available unit will be more valuable in relative terms due to an increase in market illiquidity rather than a change in the Bitcoin code. In a free market economy, when rare profits are highly demanded, their prices tend to rise.
However, the main risk is that this shortage is not irreversible. For example, Bitcoin accumulated through strategies is not out of the system. They are not burned or frozen by technical means. They are ilequid, but are available. And while Michael Saylor and his company declare their intention to maintain those reservations indefinitely, that promise is not a legal commitment or guarantee. This is an investment strategy and changes if the context is worth it.
If a strategy with a significant position in BTC, or another great entity, decides to settle even a small portion of its holdings, the psychological impact on the market can be devastating.
Bitcoin could rise in some ways and face a chain reaction in the opposite direction thanks to the perception that these giants won’t sell. Mere news of related institutional sales could stimulate panic sales among other market participants, particularly among the most speculative retailers.
This risk is amplified by current market structure. Thin markets with low liquidity are also more volatile markets. In other words, the same as strengthening bullish movements — reduction in offers — can also make the bearish movement more violent as the order flow changes.
Therefore, the current liquid BTC shortage has a positive effect on the price, but it is also a double-rimmed sword. The “functional deflation” paper ultimately relies on implicit consensus. It’s not on sale. and The implicit consensus in financial markets usually continues…until they stop doing so.
