MicroStrategy's BTC Accumulation Drives -2.23% Annual Deflation

CryptoQuant’s CEO, Ki Young Ju, has asserted that Bitcoin is now effectively a deflationary asset due to the rapid accumulation of BTC by MicroStrategy (MSTR). In a post on the social media platform X, Ju highlighted that MSTR is acquiring coins at a faster rate than what miners can produce, leading to a decrease in the supply of BTC when excluding coins held by MSTR.

According to Ju, the aggressive accumulation by MSTR has resulted in a -2.23% annual deflation rate, which could be even higher when considering other stable institutional holders. MSTR currently holds 555,450 BTC, valued at approximately $58 billion, representing 2.645% of Bitcoin’s total supply of 21 million.

Ju has also noted that the Bitcoin market has become more complex with the entry of various large players, including ETFs, institutional investors, and government agencies. This diversity has made it more challenging to predict market cycles, as profit-taking cycles are no longer solely triggered by whales cashing out at the peak. The CEO has backtracked on his previous call that the Bitcoin bull market was over, acknowledging the increased complexity of the market structure.

Despite the complexity, Ju has observed that selling pressure on BTC has eased due to “massive inflows” from spot exchange-traded funds (ETFs). This influx of capital has contributed to the deflationary nature of Bitcoin, as the demand for BTC outpaces its supply.

In summary, the aggressive accumulation of BTC by MSTR, coupled with the influx of capital from ETFs, has led to a deflationary environment for Bitcoin. The increased complexity of the market, with the entry of various large players, has made it more challenging to predict market cycles. However, the overall trend suggests a bullish outlook for Bitcoin, as the demand for the cryptocurrency continues to outpace its supply.