Is the world short of bitcoin? Micro-Strategy “Resale” Theory

Institutional demand for Bitcoin is increasing exponentially. However, the supply required to meet this is increasingly limited.

In a conversation with Beincrypto, Christophe Diserens of Swissborg Exchange Chief Wealth Officer said that large Bitcoin holders, such as Strategy (formerly Micro Strategy) and Marathon Holdings, may need to step up to provide liquidity.

Rare Paradox: Demand vs Supply

The central attraction of Bitcoin has always been its rarity, designed by its self-limiting supply. But as its popularity grows among retailers and institutional investors, this raises the question of whether there is enough Bitcoin in the market to meet the growing demand.

With a finite supply and an increasing number of companies expected to follow early adopter leads, it is likely that Bitcoin available on exchanges will soon prove insufficient.

“For over a year, the amount of BTC held on the exchange has been steadily decreasing, and there are increasing signs that OTC desks may also be starting to dry out,” Diserens told Beincrypto, “The data outperforms 10 times the new mining supply, indicating that it has become one of the most asiametic trades on the market today.”

This potential supply crunch could have a great deal of significance for institutions that have not yet entered the market.

Scramble of fluidity

Investments in facilities in Bitcoin increased after the launch of Bitcoin Exchange Trade Funds (ETFs) in 2024. These funds fundamentally changed the market dynamics and provided financial advisors with a wealth of access methods for retail investors.

This shift created a unique “banana zone,” a crypto term for the parabolic market driven by institutional demand and the fear of missed retail.

“We expect players from ETF connected institutions to have a major impact at this stage given that around 75% of Bitcoin ETF buyers are retail investors,” Diserens said.

This data point suggests that most of the capital inflows into these new regulated products comes from individual investors. As institutional money flows, it competes with other institutions, Emotionally driven retail audience.

As a result, it could be a self-reinforcement cycle of price increases to meet the overwhelming surge in system demand and retail demand. This looming crunch could create opportunities for entities with a large Bitcoin Treasury to become liquidity providers.

Can MicroStrategy pivot from “Hodler” to “Reseller”?

With the possibility of a bitcoin supply shortage, important questions arise about the role of institutional holders, such as strategy. It is world-renowned for its aggressive accumulation playbook.

“The company currently holds about 3% of its total Bitcoin supply and has been funded with $7.2 billion in convertible debt since 2020, with an average purchase price of around $70,982 per Bitcoin,” Diserens said.

While strategy co-founder Michael Saylor assumes the company as a long-term holder, strategic pivots to become a reseller or liquidity provider for other institutions are not entirely out of the question.

“This shift could open up new revenue streams, but this magnitude of change could impact investor trust, impact the company’s stock price, and impact the broader Bitcoin market,” added Diserens.

If your strategy takes such a step, all relevant compliance requirements and operational processes must be met. Given the size and resources of the company, these obligations are unlikely to pose major challenges.

If you pass the opportunity, other entities may also assume the role of resellers.

Institutional miners: a new market maker?

Beyond strategies, searching for large-scale Bitcoin liquidity providers extends to institutional miners, the foundation of the network.

These companies are uniquely positioned to meet growing demand with substantial mining capabilities and substantial BTC reserves.

This phenomenon highlights a broader trend that Bitcoin’s original infrastructure can evolve to function as a key financial intermediary.

“Large institutional miners could also serve as a key source of Bitcoin’s liquidity. With their substantial mining capabilities and substantial BTC reserves, companies like Marathon Digital Holdings and Iris Energy are positioned to help meet the growing demand.

The potential supply gap could force the Bitcoin ecosystem to force itself, but the prospect of large companies buying from a small number of providers inevitably raises concerns about centralization.

The dilemma of decentralization

Bitcoin’s decentralization lies in two pillars: distribution of ownership and dispersion of mining power.

A scenario in which investors must purchase Bitcoin directly from strategy or marathon digital rather than open exchanges can have a significant impact on the general opinion.

“If a large company controlled most of its mining and holding capabilities, it could change the public’s perception, from viewing Bitcoin as decentralized to being controlled by several powerful entities,” Diserens said.

The underlying technology of Bitcoin is designed to be distributed.

However, the concentration of ownership and mining power can be painted differently. As Bitcoin’s popularity continues to grow, the larger community needs to face these considerations faster and faster.

Is the posting a world where bitcoin runs out? MicroStrategy’s “reseller” theory first appeared in Beincrypto.