Bitcoin is changing in a big way, and it’s not just the price. According to analyst Ki Young Ju, Bitcoin has now become deflationary, thanks to an aggressive buying spree by Strategy (MSTR), a Bitcoin treasury company. Institutional buying is powering this shift. As a result, Bitcoin’s supply is tightening, and the price is feeling the effects.
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Strategy’s Buying Power Shrinks Bitcoin’s Supply
Strategy is accumulating Bitcoin at a rate faster than miners can produce it. In fact, Strategy is buying an average of 2,087 BTC a day, far surpassing the 450 BTC miners are pulling in daily. This aggressive strategy has led to a -2.33% annual deflation rate for Bitcoin, a clear sign of shrinking supply. The company’s holdings—currently 555,000 BTC—are not for sale anytime soon, according to Ki Young Ju, who stated that the treasury’s BTC supply is “illiquid with no plans to sell.”
This move is disrupting Bitcoin’s market dynamics. Michael Saylor, co-founder of Strategy, has been a vocal advocate for Bitcoin. In fact, he has encouraged companies to build BTC treasuries. His efforts have influenced more than 13,000 institutions to hold Strategy stock, with many diversifying their portfolios by investing in Bitcoin.
Institutional Players Rush to Acquire Bitcoin
Strategy is not alone in the institutional rush to Bitcoin. Hedge funds, asset managers, and tech companies are joining the charge, purchasing Bitcoin to hedge against fiat currency inflation. The constant buying pressure is not only driving prices up but also reducing volatility by stabilizing the market.
The real kicker? Bitcoin ETFs are also helping. Institutional investors are pouring capital into these ETFs, smoothing out price swings and making downturns less severe. But for now, the big fish—sovereign wealth funds—are holding back. They’re waiting for clearer regulations before diving into Bitcoin on a large scale. As Anthony Scaramucci of SkyBridge points out, once the U.S. establishes a solid regulatory framework, sovereign funds will likely flood the market, further pushing Bitcoin’s price higher.
At the time of writing, Bitcoin is sitting at $104,439.
