Why Bitcoin's Structural Supply-Demand Imbalance Could Sustain a Multi-Year Bull Run

Bitcoin’s ascent as a macroeconomic asset class has been catalyzed by a confluence of structural forces: institutional adoption and halving-driven scarcity. These dynamics are not merely speculative tailwinds but foundational shifts in how Bitcoin is perceived, stored, and traded. As of 2025, the interplay between institutional buying and the 2024 halving has created a supply-demand imbalance that could underpin a multi-year bull run, even amid short-term volatility.

Institutional Adoption: A New Era of Demand

The approval of U.S. spot Bitcoin ETFs in January 2024 marked a watershed moment. By Q4 2024, these products had attracted over $95.4 billion in assets under management, with BlackRock’s iShares Bitcoin Trust (IBIT) alone accounting for $53.77 billion in assets [1]. This institutional-grade infrastructure has transformed Bitcoin from a speculative asset into a regulated, liquid investment vehicle. Traditional financial institutions, including family offices and corporate treasuries, now allocate capital to Bitcoin with the same rigor as gold or equities [5].

The shift to institutional custody has also reshaped supply dynamics. While self-custody growth has declined by 15% year-over-year [2], ETFs and institutional vaults now absorb significant portions of newly mined Bitcoin. For instance, spot ETFs absorbed over 200,000 BTC in the first months of 2024, reducing immediate selling pressure from miners [4]. This absorption effect is critical: it mitigates the volatility historically tied to concentrated miner sales and creates a more stable demand curve.

Halving-Driven Scarcity: A Structural Tailwind

The 2024 halving, which reduced Bitcoin’s block reward from 6.25 BTC to 3.125 BTC, further entrenched its scarcity narrative. By slowing the rate of new supply, the halving reinforced Bitcoin’s deflationary design, reducing annual inflation from ~1.8% to 0.9% [2]. This structural scarcity is amplified by institutional demand. For example, U.S. spot ETFs have absorbed over 25% of global Bitcoin trading volume, effectively locking up newly mined coins in regulated vehicles [1].

The halving’s impact is not purely theoretical. Historical data shows that Bitcoin’s price often surges in the 90–180 days post-halving, as the reduced supply coincides with heightened institutional buying [5]. In Q1 2024, Bitcoin’s price rose 75% to $73,000, driven by $12 billion in ETF inflows over 10 weeks [5]. By Q2 2025, despite a temporary dip to $80,000 in July, Bitcoin rebounded to $110,000, reflecting the resilience of institutional demand [1].

Macroeconomic Synergies and Institutional Anchors

Bitcoin’s correlation with macroeconomic indicators further strengthens its bull case. From 2020 to 2025, Bitcoin exhibited a 0.78 correlation with global M2 money supply, with price surges lagging liquidity expansions by 90 days [1]. This suggests that Bitcoin functions as a hedge against monetary inflation, a role increasingly embraced by institutional portfolios. Additionally, its inverse correlation with the U.S. Dollar Index (DXY) (-0.4 to -0.8 over five years) positions Bitcoin as a beneficiary of dollar weakness [1].

The 2024 halving also enhanced Bitcoin’s inflation-hedging appeal. With its post-halving inflation rate (0.9%) below the U.S. CPI (2.7%), Bitcoin has become a more attractive store of value in an era of quantitative easing [1]. This dynamic is reinforced by corporate adoption: firms like MicroStrategy have accumulated over 400,000 BTC, treating Bitcoin as a strategic treasury asset [4].

Challenges and Counterarguments

Critics argue that ETF inflows have slowed in Q3 2025, with 14-day average net inflows dropping to 540 BTC per day [1]. However, this contraction reflects short-term volatility rather than a structural reversal. Institutional buying remains robust, with $55 billion in year-to-date inflows as of Q3 2025 [6]. Moreover, the centralization of custody via ETFs—while controversial—has reduced barriers to entry for institutions, enabling broader adoption.

Regulatory tailwinds also persist. The U.S. Strategic Bitcoin Reserve and the EU’s MiCA framework have normalized Bitcoin as a legitimate asset class [3]. These developments, combined with the halving’s scarcity effect, create a self-reinforcing cycle: as institutional demand outpaces supply, prices rise, attracting further capital.

Conclusion: A Sustained Bull Case

Bitcoin’s structural supply-demand imbalance is not a fleeting phenomenon but a product of enduring institutional adoption and halving-driven scarcity. The 2024 halving reduced new supply, while ETFs and corporate treasuries created a floor for demand. As macroeconomic trends favor Bitcoin’s role as a hedge against inflation and dollar weakness, this imbalance is likely to sustain a multi-year bull run. For investors, the key takeaway is clear: Bitcoin’s institutionalization and scarcity are not speculative narratives but foundational forces reshaping global finance.

Source:
[1] Bitcoin Price Stalls Despite Institutional Buys: Why BTC Demand Is Shrinking [https://yellow.com/research/bitcoin-price-stalls-despite-institutional-buys-why-btc-demand-is-shrinking]
[2] Bitcoin Halving 2024 [https://www.lseg.com/en/ftse-russell/research/bitcoin-halving]
[3] Bitcoin Q1 2025: Historic Highs, Volatility, and Institutional Moves [https://blog.amberdata.io/bitcoin-q1-2025-historic-highs-volatility-and-institutional-moves]
[4] Corporate Bitcoin Treasury Revolution [https://q21.capital/blog/corporate-bitcoin-treasury-revolution-how-bitcoin-became-mainstream]
[5] Bitcoin's Long-Term Price Potential: A Macro and Portfolio Analysis [https://www.bitget.com/news/detail/12560604942698]
[6] What Q3 2025 Taught Us About Institutional Crypto Adoption [https://www.linkedin.com/pulse/what-q3-2025-taught-us-institutional-crypto-adoption-iconominet-mhz9f]