Bitcoin’s Supply Dynamics: A Path to $1 Million?

The cryptocurrency landscape is witnessing a pivotal shift as Bitcoin’s long-term holders continue to grow in numbers, outpacing the creation of new coins. According to recent data from Fidelity Digital Assets, approximately 550 BTC are entering the “ancient supply” category daily—coins held for more than ten years—while only 450 BTC are newly issued. This interesting trend raises critical discussions about Bitcoin’s future price potential, specifically the possibility of reaching $1 million.

Understanding the Shift in Bitcoin Accumulation

As of now, over 17% of Bitcoin’s total supply is considered illiquid, equating to roughly 3.4 million BTC valued at approximately $360 billion, based on a speculative price of $107,000 per Bitcoin. This scenario reflects robust holder conviction, as the supply decreases in the liquid market only about 3% of the time. Projections indicate that by 2028, this illiquid share could rise to 20% and potentially escalate to 25% by 2034. Such a tightening of available supply could fundamentally alter the dynamics of Bitcoin trading.

Institutional investor engagement has been a significant driving force behind this increasing demand. Forecasts from Bitwise suggest that Bitcoin inflows could reach $120 billion by 2025 and escalate up to $300 billion by 2026. Various players contribute to this demand, including nation-states reallocating a fraction of their gold reserves, U.S. states adopting Bitcoin assets, and wealth management platforms incorporating even a minor percentage into their portfolios.

In a bullish scenario, total inflows could exceed $426 billion, absorbing over 4 million BTC, or nearly 19% of the existing supply. This institutional accumulation suggests that a significant portion of Bitcoin’s supply is becoming increasingly untouchable, further enhancing the price projections made by market analysts.

Evaluating the $1 Million Price Target

For Bitcoin to reach the ambitious price point of $1 million, its market capitalization would need to skyrocket to $21 trillion—ten times the current $2.10 trillion valuation. With nearly 19,880,604 BTC already mined, this fixed supply coupled with growing illiquidity lays the groundwork necessary for such a milestone.

Historical patterns following Bitcoin’s halving events in 2013, 2017, and 2021 reveal that reduced supply growth frequently corresponds with significant price rallies. The ancient supply, currently over 17% illiquid, adds to the narrative that the liquid supply is diminishing as institutional investors continue their accumulation spree. However, some challenges exist in gearing up for this impressive price target.

Post-2024 U.S. elections have shown an uptick in the ancient supply’s daily decrease, occurring nearly ten times the historical average. It indicates that even long-term holders can be prompted to sell amidst volatile market conditions. Remarkably, five-year holders showed a decrease 39% of the time following the elections, correlated with a lack of direction in Q1 2025 price movements.

Despite potential volatility, another factor arises: Bitwise identified $35 billion in sidelined demand in 2024 stemming from cautious policies noted at major financial firms managing substantial assets. The bear case lays out a projection of over $150 billion in inflows, with the bullish scenario exceeding $426 billion, further underscoring that demand remains robust.

As both ancient supply and anticipated institutional inflows continue to tighten Bitcoin’s availability, the once far-fetched notion of hitting $1 million becomes more plausible. While some roadblocks may moderate this appreciation, the current trajectories suggest an intricate dance between demand and scarcity within the Bitcoin marketplace.