Grayscale and MicroStrategy lead a surge in institutional demand for new coins, with selling not part of the landscape, data shows.
Institutions are buying huge amounts of Bitcoin (BTC) and hodling, not selling it, data shows as the network mimics early 2016.
Data from various sources uploaded to social media this week show that over 40% of the Bitcoin supply has now not left its wallet in two years.
Institutional BTC demand far outweighs supply
At the same time, institutional-grade sources are purchasing huge amounts of BTC, in what looks increasingly like preparations for a long-term investment strategy.
“In the last two weeks... - Grayscale added 14,422 BTC to $GBTC. - Microstrategy bought 21,454 BTC. - Bitcoin miners mined 12,594 BTC,” analyst Kevin Rooke summarized.
Institutions’ current and prospective love of Bitcoin hit the headlines this week thanks to MicroStrategy, which made the largest cryptocurrency its new treasury reserve asset. The 21,454 BTC buy-in came at a cost of $250 million.
Grayscale, meanwhile, has returned to Bitcoin purchases after a temporary moratorium. The company already owns a huge number of coins with Cointelegraph reporting that it is on track to hold 3.4% of the total supply by 2021 as its AUM recently surpassed $5 billion.
Throughout the past weeks, miners have contributed fewer coins in supply compared even to demand from these two institutional players. Since the release of “new” BTC per block is fixed — and went down 50% at the halving in May — price rises were all but guaranteed.
Fixed supply, changing of which requires miner consensus, which would likely make all network participants poorer, is a key feature of Bitcoin which has allowed it to preserve its status as digitally scarce hard money.
Bitcoin buying from Grayscale and MicroStrategy Vs. supply. Source: Kevin Rooke/ Twitter
“No one wants to take profits”
Further figures reinforce the idea that although BTC/USD has hit its highest levels in over a year, investors are in no mood to sell.
Instead, a long-term investment strategy seems to already be in play, with almost half the available supply staying stationary for at least two years.
“The last time this much supply had built up and was locked in Bitcoin was January 2016,” Charles Edwards of digital asset manager Capriole commented, adding:
“Despite the recent price rises, no one wants to take profits. Demand is increasing and supply is reducing.”
Bitcoin hodl wave chart showing stationary supply. Source: Charles Edwards/ Glassnode
At that time, almost two years remained before Bitcoin hit its current all-time highs of $20,000.
As Cointelegraph reported, comparisons to 2016 likewise came from statistician Willy Woo this week, Woo arguing that Bitcoin was now in an “early main bull phase” similar to Q4 of that year.
Capitalizing on MicroStrategy CEO Michael Saylor’s words, Tyler Winklevoss meanwhile told Twitter followers to hedge against fiat inflation with Bitcoin.
“The Great Monetary Inflation is nigh. Arm yourself with Bitcoin,” he wrote on Wednesday.