A recent report by Fidelity Digital Assets reveals that 17% of all Bitcoin (BTC) is classified as 'ancient Bitcoin,' meaning these coins have not moved for at least ten years. This ancient supply equates to approximately 3.4 million BTC, valued around $360 billion. The report highlights a concerning trend where more Bitcoins are becoming ancient daily (about 566 BTC) than are newly mined (roughly 450 BTC), signaling a growing supply squeeze.
This increasing illiquidity could significantly impact Bitcoin's circulating supply and market dynamics. About 20% of all minted Bitcoin is estimated to be permanently lost due to inaccessible wallets or discarded private keys. Coins linked to Bitcoin’s creator, Satoshi Nakamoto, also remain dormant for over a decade, adding to concentrated, inactive supply. As the supply cap of 21 million BTC approaches, these factors contribute to a shrinking active float and heightened price volatility.
Fidelity's analysis projects that by 2026, up to 30% of Bitcoin’s supply could be illiquid. Institutional investor interest is also rising sharply; inflows into Bitcoin-related assets are predicted to reach $120 billion by 2025 and $300 billion by 2026. This growing demand combined with the diminishing liquid supply raises the probability of significant price appreciation, supporting optimistic price targets such as $1 million per BTC under favorable market conditions.
Historical patterns following previous Bitcoin halving events (2013, 2017, 2021) suggest that reduced supply growth aligned with increasing demand tends to drive price rallies, reinforcing the current supply-demand narrative. However, even long-term holders may liquidate during periods of volatility, evidenced by notable declines in ancient supply after the 2024 US election, which moderates extreme price movements.
Overall, the report underscores the tightening supply amid robust institutional accumulation, suggesting increased scarcity that may amplify Bitcoin's price potential in the medium to long term.