Bitcoin’s supply dynamics are shifting dramatically due to the relentless accumulation strategy of Strategy, a firm led by crypto advocate Michael Saylor. The company is buying Bitcoin faster than miners can produce it, which has effectively introduced a deflationary force into the market.
According to Ki Young Ju, CEO of CryptoQuant, Strategy’s holding of 555,000 BTC has become a major supply sink. “Their 555,000 BTC is illiquid with no plans to sell,” he stated, adding that this contributes to a “-2.23% annual deflation rate — likely higher with other stable institutional holders.”
Connecting Traditional Finance With Bitcoin
Strategy is more than just a buyer of BTC; it acts as a conduit for traditional financial market capital to flow into the Bitcoin ecosystem. By issuing corporate debt and equity, Strategy funnels proceeds directly into BTC purchases. Michael Saylor noted that more than 13,000 institutions now hold Strategy stock, providing indirect exposure to Bitcoin.
This dual role—as both a treasury asset holder and a bridge to TradFi—has amplified the firm’s impact on Bitcoin’s liquidity and volatility. With fewer coins circulating and more institutional holders entering the market, supply is tightening while price stability is improving.
A Synthetic Bitcoin Halving
Adam Livingston, author of The Bitcoin Age and The Great Harvest, believes Strategy’s buying habits mimic the effects of Bitcoin’s halving events. “Strategy is synthetically halving Bitcoin by outpacing miner supply through high demand,” he said.
Current miner output stands at about 450 BTC per day, while Strategy is buying roughly 2,087 BTC daily. This purchasing rate is more than four times the rate at which new coins are being minted, accelerating scarcity.
Declining Miner Reserves and Institutional Demand
Charts from CryptoQuant reveal a steady decline in miner-held reserves, suggesting that miners aren’t the primary suppliers to the market anymore. Institutions like hedge funds, tech firms, and asset managers are increasingly viewing Bitcoin as a viable hedge against inflation and fiat currency risk.
Spot Bitcoin ETFs have also played a role in dampening price swings. Their ability to absorb large inflows from traditional markets provides a buffer during volatility.
Regulation Holds the Key for Sovereign Wealth Funds
Despite rising interest, not all institutional giants have stepped in. Sovereign wealth funds, the deepest pockets in the market, are waiting on the sidelines. SkyBridge founder Anthony Scaramucci said that a lack of regulatory clarity in the U.S. is the key reason.
“Once a comprehensive regulatory framework emerges in the US, it will trigger large blocks of Bitcoin purchases by sovereign wealth funds, increasing Bitcoin’s price,” Scaramucci explained.
Until then, Strategy’s aggressive buying continues to reshape the supply-demand balance in Bitcoin, offering a glimpse into what happens when institutions take the lead.