Miners can't keep up with demand: The Bitcoin supply squeeze is getting real

While Bitcoin (BTC) rips through fresh all-time highs, climbing above $118K and $120K within reach, the metrics of the rally are getting far more complex than just bullish sentiment. On-chain data shows an emerging imbalance in supply and demand reminiscent of late 2020.

BTC price is now up by 105% over the last year and leading the altcoins with massive bullish sentiments. The cumulative crypto market cap is nearing the $3.7 trillion mark with a 24-hour trading volume of around $163 billion.

At the same time, Bitcoin dominance is on the high side of 64%, and the fear and greed index is flashing “Greed” among traders.

Miners can’t keep up with demand

As per the Glassnode data, wallets holding less than 100 BTC are now accumulating Bitcoin at a combined pace of 19,300 BTC per month. This number is already 6,000 more BTC than miners are issuing monthly (13,400 BTC).

It added that this wide base of retail and high-net-worth holders is absorbing more than 100% of the net new supply. If some Bitcoin remains in the market, then ETFs, institutions, or treasuries are gobbling up the rest.

Bitcoin balance on exchanges is also dropping, and the supply shock is getting real. Exchange balances are falling, long-term holders are growing, and miner issuance is unable to keep up. Long-term holders (LTHs) are absorbing more BTC than miners can mint, and they’re not even thinking about selling.

The Net Unrealized Profit/Loss (NUPL) for long-term holders is currently sitting at 0.69, which is below the threshold red zone of 0.75. In the last cycle, the market spent 228 days in the euphoria zone, and this cycle, just 30 days.

Even short-term holders, the classic profit-takers, are yet to show any signs of dumping. Their average entry price is around $100,000, which means they’re sitting on 17-18% gains.

Bitcoin boom turns corporate heads

There’s the macro picture, which implies that Bitcoin isn’t just gaining in price, it’s gaining legitimacy. Institutional investors are leaning in while corporates are converting cash into BTC. Michael Saylor’s Strategy (MSTR) turns out to be the poster child of corporate Bitcoin accumulation. It now owns nearly 600,000 BTC and holds a $28 billion paper profit.

Only Satoshi and BlackRock hold more than MSTR. But unlike BlackRock, which holds BTC via its ETF (IBIT) on behalf of investors, Strategy holds BTC outright on its balance sheet. Saylor isn’t shy about it, and when BTC hit an all-time high yesterday, he posted: “The halls of eternity echo with the cries of those who sold their Bitcoin.” 

Other companies are riding the same wave. Japan’s Metaplanet owns over 15,500 BTC, now worth nearly $1.83 billion, up from $284 million. El Salvador, the original Bitcoin nation, now holds 6,234 BTC, valued at $733 million, with a $232 million paper profit.

Semler Scientific (SMLR) has followed the BTC-on-balance-sheet strategy too. It hodls 4,636 BTC and $160 million in gains. France’s Blockchain Group is in the mix with 900 BTC, up $30.5 million on paper.

This rally wasn’t isolated to Bitcoin. Ethereum broke the $3,000 mark again, and XRP, SOL, DOGE are all rallying with it. XRP price spiked by 25% in the last 7 days. It is trading at an average price of $2.78 at press time.

Cryptopolitan Academy: Want to grow your money in 2025? Learn how to do it with DeFi in our upcoming webclass. Save Your Spot