Institutions Make Bitcoin a Long-Term Asset, Forecast Illiquid Supply Surge

Bitcoin’s Illiquid Supply Forecast to Rise to 8.3M by 2032: Fidelity

Fidelity Digital Assets has released a forecast suggesting that the illiquid supply of Bitcoin could increase significantly over the next seven years, reaching approximately 8.3 million by 2032. The projection is based on ongoing trends in institutional adoption, long-term holding behaviors, and the maturation of the cryptocurrency market. According to the report, the growing use of Bitcoin as a store of value and its increasing acceptance among institutional investors are key factors driving the rise in illiquid supply.

The illiquid supply of an asset refers to the portion held in accounts that are not actively traded, such as retirement funds, institutional reserves, and private wealth. This contrasts with liquid supply, which is available for immediate trading on exchanges. A rising illiquid supply often signals growing confidence in an asset's long-term value, as investors opt to hold rather than trade. The projected increase aligns with broader industry trends, including a decline in short-term speculative trading and a rise in Bitcoin being integrated into traditional portfolio strategies.

Fidelity’s analysis highlights a shift in investor behavior, particularly from institutional actors, toward treating Bitcoin as a strategic asset. This includes the growing number of companies allocating a portion of their corporate treasuries to Bitcoin, as well as the introduction of regulated investment vehicles such as Bitcoin exchange-traded funds (ETFs). These developments are likely to accelerate the transition of Bitcoin from speculative trading into long-term investment, further increasing the illiquid supply.

The implications of this forecast extend beyond the market structure of Bitcoin. A higher illiquid supply could lead to reduced short-term volatility, as the availability of Bitcoin for immediate trading decreases. This could also impact market dynamics, with fewer assets being available for rapid price swings driven by short-term trading activity. Analysts suggest that this trend may result in a more stable and mature Bitcoin market, potentially attracting a broader range of institutional and retail investors.

However, the report also acknowledges challenges, including regulatory scrutiny and the need for improved infrastructure to support the growing adoption of Bitcoin as a long-term asset. Regulatory clarity remains a critical factor in determining how quickly institutions will adopt Bitcoin as part of their investment strategies. Additionally, the development of custodial solutions, trading platforms, and financial products will play a key role in facilitating the transition from liquid to illiquid holdings.

Despite these challenges, the forecast underscores a fundamental shift in how Bitcoin is perceived within the global financial system. As institutional adoption continues to expand and investor sentiment evolves toward a long-term outlook, the illiquid supply of Bitcoin is expected to grow, reinforcing its position as a legitimate and enduring asset class.