Corporate Bitcoin Accumulation, ETF Inflows Drive 3.4% Supply Squeeze
2min read Bernstein analysts have predicted that Bitcoin is poised to reach new highs in the near future. This optimistic outlook is driven by two primary factors: the increasing accumulation of Bitcoin by corporations and the renewed inflows into exchange-traded funds (ETFs). These developments are creating a "supply squeeze," which is expected to drive up the price of Bitcoin.
Corporate treasuries are increasingly viewing Bitcoin as a strategic asset. Companies like Strategy, formerly known as microstrategy, have made significant investments in Bitcoin, positioning it as a key component of their balance sheets. Strategy, under the leadership of its founder and executive chairman Michael Saylor, has been particularly vocal about the benefits of Bitcoin over traditional assets like gold and the U.S. dollar. Saylor advocates for Bitcoin as a superior treasury management tool, leveraging the company's holdings to issue financial instruments and acquire more Bitcoin.
The strategy of corporate accumulation is not limited to Strategy alone. Other companies are also recognizing the potential of Bitcoin as a store of value and a hedge against inflation. This trend is contributing to a reduction in the available supply of Bitcoin, thereby increasing its scarcity and driving up its price. Last week, Twenty One Capital announced an initial accumulation of 42,000 BTC (about $4 billion), joining the competition among companies like Strategy. Currently, about 80 companies hold a total of 700,000 BTC, accounting for 3.4% of the total supply.
In addition to corporate accumulation, ETF inflows are further intensifying the supply squeeze. ETFs provide investors with an accessible and regulated way to gain exposure to Bitcoin, attracting a broader range of investors who might otherwise be hesitant to enter the cryptocurrency market directly. The increased demand from ETFs is putting additional pressure on the limited supply of Bitcoin, further boosting its price. The net inflow into U.S. Bitcoin spot ETF reached $3 billion last week, hitting a five-month high. The total holdings represent 5.5% of the circulating Bitcoin supply, with institutional ownership increasing from 20% in September last year to 33%. Among these, 48% are held by investment advisors, reflecting asset allocation demands. Combined with corporate holdings, institutional capital now controls 9% of the BTC supply.
Ask Aime: What's driving the price of bitcoin to new highs?
According to the analyst's forecast, the combination of corporate treasury holdings and ETF inflows is expected to create a perfect storm for Bitcoin, pushing its price to new all-time highs. This forecast is based on the fundamental principles of supply and demand, where a limited supply coupled with increasing demand inevitably leads to higher prices. The proportion of BTC balances on exchanges has decreased from 16% at the end of 2023 to 13%, but some assets have only been transferred to ETF custodians. Bernstein analysts estimate that Bitcoin will reach a cycle peak of around $200,000 by the end of 2025, $500,000 by the end of 2029, and $1 million by the end of 2033, with intermittent one-year bear markets during the period.
The impact of these developments is already being felt in the market. Companies like Metaplanet have reached significant milestones in their Bitcoin holdings, further validating the strategy of corporate accumulation. The race among corporations to accumulate Bitcoin is heating up, with each new investment adding to the supply squeeze and driving the price higher.
In conclusion, the outlook for Bitcoin is bullish, driven by the increasing corporate adoption and ETF inflows. As more companies recognize the value of Bitcoin as a treasury asset and investors seek exposure through ETFs, the supply squeeze is expected to intensify, pushing Bitcoin to new highs. This trend underscores the growing acceptance of Bitcoin as a legitimate and valuable asset in the financial landscape. 
