Bitcoin Supply Shock: BlackRock Warns of Insufficient Coins for U.S. Millionaires
1min read BlackRock, the world's largest asset manager, has issued a warning about a potential Bitcoin supply shock, stating that there may not be enough coins to meet the demand from U.S. millionaires. In a recent report titled "Why Bitcoin? A Perspective from Model Portfolio Builders," blackrock analysts Michael Gates and Brett Wager highlighted the inelastic nature of Bitcoin's supply compared to gold.
Unlike gold, which can increase its supply to meet excess demand, Bitcoin has a hard-capped supply of 21 million tokens, with a predictable issuance schedule until 2140. However, the analysts pointed out that the real available float is likely far smaller, with a conservative estimate of 3 to 4 million bitcoins considered permanently inaccessible due to lost, forgotten, or destroyed keys. To illustrate the scarcity of available bitcoins, BlackRock noted that if every millionaire in the U.S. asked their financial advisor to acquire 1 bitcoin, there would not be enough to meet the demand.
BlackRock's Model Portfolio Solutions team sees several substantive arguments that support Bitcoin's long-term investment merit. These include its potential to serve as a novel store of value and global monetary alternative, a hedge against U.S. dollar hegemony and political instability, and a proxy play on the broader 'offline' to 'online' digital transition of goods and services, supercharged by 'boomer-to-millennial' demographic tailwinds. Collectively, these features may help provide unique and additive sources of risk premia and diversification to traditional multi-asset portfolios.
At the time of writing, Bitcoin is trading at $85,381, reflecting its growing appeal as an alternative investment option for high-net-worth individuals and institutional investors.
