CoinWorld news reports that institutional demand for Bitcoin is growing exponentially. However, the supply to meet this demand is becoming increasingly limited. In a conversation with BeInCrypto, SwissBorg Exchange Chief Wealth Officer Christophe Diserens stated that large Bitcoin holders like Strategy (formerly MicroStrategy) or Marathon Holdings may need to step up to provide liquidity. The Scarcity Paradox: Demand vs Supply The core attraction of Bitcoin has always been its scarcity, determined by its self-limiting supply. However, as it becomes more popular among retail and institutional investors, a question arises: is there enough Bitcoin in the market to meet the ever-growing demand? With limited supply, an increasing number of companies are expected to follow the practices of early adopters, and the available Bitcoin on exchanges may soon seem insufficient. This potential supply tightening could have significant implications for institutions that have not yet entered the market. Competing for Liquidity After Bitcoin exchange-traded funds (ETFs) launch in 2024, institutional investment in Bitcoin has increased. These funds fundamentally change market dynamics, providing financial advisors with a simple way to access retail investor wealth. This shift creates a unique 'banana zone', a cryptocurrency term referring to a parabolic market driven by institutional demand and retail fear of missing out (FOMO). This data point suggests that the vast majority of funds flowing into these new, regulated products come from individual investors. As institutional funds flow in, they compete with other institutions and emotion-driven retail audiences. The outcome could be a self-reinforcing price increase cycle, where limited supply meets a huge surge in institutional and retail demand. This impending tightening may create opportunities for entities with significant Bitcoin reserves to become liquidity providers. Will MicroStrategy shift from 'HODL' to 'dealer'? In the potential context of Bitcoin supply shortages, a key question arises regarding the role of institutional holders like Strategy, known globally for its aggressive accumulation strategy. While Strategy co-founder Michael Saylor envisions the company as a long-term holder, strategically shifting to become a dealer or liquidity provider for other institutions is not entirely out of the question. If Strategy were to take such a step, it would need to meet all relevant compliance requirements and operational processes. Given the company's scale and resources, these obligations are unlikely to pose significant challenges. If it passes on this opportunity, other entities may also take on the role of dealers. Institutional Miners: The New Market Makers? Beyond Strategy, the search for large-scale Bitcoin liquidity providers has also expanded to the foundation of the network: institutional miners. These companies, with their massive mining capabilities and substantial BTC reserves, have a unique advantage in meeting the growing demand. This phenomenon highlights a broader trend where Bitcoin's original infrastructure may evolve into critical financial intermediaries. While the potential supply gap may force the Bitcoin ecosystem to reshape itself, the prospect of major companies buying from a few suppliers inevitably raises concerns about centralization. The Decentralization Dilemma Bitcoin's decentralization is built on two pillars: the distribution of ownership and the decentralization of mining power. If investors must buy Bitcoin directly from Strategy or Marathon Digital instead of exchanges, it could severely impact public opinion. The underlying technology of Bitcoin is designed for distribution. However, a concentration of ownership and mining power could paint a different picture. As Bitcoin continues to grow in popularity, the broader community will need to confront these considerations as soon as possible.

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