Is Bitcoin’s Supply Truly Running Out?


Written by Edward Gonzales

February 20, 2021

It is without a doubt a new chapter for cryptocurrency. Some of the biggest names in the game have recently announced their interest in the most popular internet asset to exist: Bitcoin. The rest of the world is starting to wake up and accept the fact that Bitcoin is here to stay. With Bitcoin recently entering the one trillion dollar market cap club, a lot of new eyes are looking into the asset’s features. Needless to say, this puts Bitcoin on the map. 

Bitcoin has consistently produced new all-time-high prices since December 23, 2020 resulting in massive FOMO. This has led major investors to pour money into the asset while it is still considered “cheap.” Now that Bitcoin has entered this stage in its life, it opens up new investment opportunities for many other firms and hedge funds. There are many restrictions on traditional firms that will not allow trading in markets with less than a trillion dollar market value. 

Now the 6th most valuable asset on the planet, Bitcoin continues to dominate as speculators are left speechless. Bitcoin still has a way to go before it takes the market cap of gold, but it has already crushed so many other assets on its uptrend. 

We have seen other cryptocurrencies like Ethereum are far behind at a 224 billion market cap. For investors this is a huge tell-tale sign: when you see an asset with such an untapped market, you see much room for growth. While Bitcoin still has room to grow, exploring some of these other markets could very well lead to “gold”. The cryptocurrency market, in general, is still very underdeveloped with just over two trillion in the total market cap of all combined cryptocurrencies. 

An asset’s market value is calculated by multiplying the total circulating supply with the current market price. When you take the current price of Bitcoin as this article is written ($54,000) and multiply it by a supply of 21 million, you get roughly 1.13 trillion. By using this formula, other markets can be interpreted to decide if you would like to invest in them for the long term. Imagine what some of those coins will yield when they grow to reach a market cap similar to Bitcoin. Be prepared to wait, however. Bitcoin did not reach this market cap overnight. 

As new money floods Bitcoin markets each day, it brings many new traders and hopeful investors. The demand for Bitcoin grows higher as supply steadily declines. More and more users are exporting their precious cryptocurrency to cold wallets to preserve their coins. This raises the question: Is Bitcoin‘s supply truly running out?

Yes and no. There’s not an easy way to answer the question. Yes, Bitcoin is running out because there is less available for sale on the markets. But, no, Bitcoin is not running out because you will always have a chance to buy some. However, you will have to pay more to acquire less later. In other words – despite Bitcoin being limited to only 21 million, there will always be Bitcoin on some market for sale. As bitcoin becomes more scarce you will be forced to pay more to obtain some.

In the recent Bitcoin rally, we have seen the price rise up to $55,500. You should not take this as financial advice, but it seems apparent to many investors that the chance to buy Bitcoin is fading away. Sure there are still a few million Bitcoins to be mined, but what you should also know is that miners often keep their rewards in a cold wallet. Most of the coins being mined today may never even see an exchange. A lot of experienced traders have a separate trading portfolio away from their long term investment portfolio. They will routinely extract Bitcoin and other cryptocurrency to their cold wallet to protect their funds, further deducting from the circulating supply. It is estimated that only 14% of Bitcoins in circulation are available on any given exchange. What are you waiting for?

If you don’t know anything about Bitcoin or cryptocurrency, don’t be scared. All you have to do is buy and hold some Bitcoin and you won’t miss out. If you want to further your investment strategies or become a successful day trader, check out some of our available courses and free resources here.

By viewing any material or using the information within this publication you understand that this is general education material and you can not hold any person or entity responsible for loss or damages resulting from the content or general advice provided here. Trading cryptocurrency has potential rewards, but also potential risks. You must be aware of the risks and be willing to accept them in order to invest in the markets. Only trade with funds you can afford to lose. This publication is neither a solicitation nor an offer to buy/sell cryptocurrency or other financial assets. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in any material on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.

Written by Edward Gonzales © Crypto University 2021

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