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One of the most significant turning points in Bitcoin's history has been reached: 95% of the total amount of BTC that will ever exist has been mined. This indicates that out of a fixed maximum of 21 million BTC, about 19,950,086 BTC are currently in use. There are fewer than 1,050,000 BTC left to be mined.
Will supply shock hit?
Although it seems like the ideal scenario for a supply shock, the actual situation is more complicated and less dramatic in the short run. The important thing to remember is that the remaining 5% will not be mined anytime soon. The supply of Bitcoin follows a halving schedule that causes issuance to slow down exponentially rather than decreasing in a straight line.
Despite the fact that there are only a million coins remaining, it will take over a century to mine them all. In 2028 the block reward will be reduced to 1.56 BTC due to the next reduction. The world will be approximately 97.5% mined by 2032. It will be higher than 99% by 2040.
Around 2140, the final satoshi is anticipated to go into circulation. Because of this, the market is not responding to the headline 95% mined, as some may anticipate. The mining-related supply shock is largely behind us. The actual supply dynamics of Bitcoin are already controlled by a completely different factor: the collision between a nearly fixed supply and demand pressure.
Is it enough?
The scarcity has already materialized. Another overlooked factor is that a significant portion of current Bitcoin is essentially frozen. Three to four million Bitcoins are thought to have been lost forever. In the meantime, long-term investors keep hoarding Bitcoin for years at a time; over 70% of the supply has not changed in more than a year.
Additionally, rather than releasing its circulating supply, ETF funds and custodians are progressively absorbing it on the institutional front. Currently, the goal of mining is no longer to increase the quantity of Bitcoin in circulation. Instead of an explosion of new supply, it is now a long-term process of network security fee collection and gradual issuance.
A sharp change in price does not occur when 95% of the mining is completed. It is an affirmation of the end of the period of fast money growth. From now on, the demand for what is already available will determine the price of Bitcoin rather than how much is produced.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team