Over the past year, the holdings of institutions in Bitcoin have significantly increased, with about 8% of the total supply of Bitcoin now controlled by major entities, and this proportion continues to rise. Large institutions, including exchange-traded funds (ETFs), publicly listed companies, and even sovereign nations, are accumulating vast amounts of Bitcoin. This trend raises several key questions for us.
Is the increasing presence of institutions a positive sign for Bitcoin? With more and more Bitcoins being locked in cold wallets, corporate treasuries, and ETFs, is the reliability of on-chain data decreasing?
Today we will delve into the data, track the flow of funds, and explore whether Bitcoin's decentralization spirit is under threat or simply maturing.
The rise of institutional giants.
Let's start with the balance sheets of publicly listed companies. Companies including Strategy, MetaPlanet, and others have cumulatively held over 700,000 Bitcoins, accounting for about 3.33% of the total supply of 21 million Bitcoins. While this supply cap may not be reached in our lifetime, the signal is clear: these institutions are making long-term bets.
In addition to Bitcoin directly held by companies, ETFs have also become an important force in the market. As of now, spot Bitcoin ETFs hold approximately 965,000 Bitcoins, slightly below 5% of the total supply. This number fluctuates, but it remains an important factor influencing daily market dynamics. If we add the holdings of corporate treasuries and ETFs, the total exceeds 1.67 million Bitcoins, accounting for about 8% of the theoretical total supply. But the story doesn't end there.
Not only Wall Street and tech giants are taking action; some sovereign nations are also starting to enter the Bitcoin space. Through strategic reserves and direct purchases, governments worldwide collectively hold approximately 542,000 Bitcoins. Adding corporate and ETF holdings, institutions, ETFs, and governments control over 2.2 million Bitcoins, about 10.14% of the total supply of 21 million.
The forgotten Satoshi and lost supply.
Not all 21 million Bitcoins are available for circulation. According to the '10-year HODL wave' data (measuring Bitcoins that have not moved for ten years), approximately 3.4 million Bitcoins may have been permanently lost. This includes Satoshi's wallet, early mining rewards, forgotten seed phrases, and even USB drives buried in landfills.
Currently, there are approximately 19.8 million Bitcoins in circulation, with an estimated 17.15% lost, so the actual circulating supply is close to 16.45 million. This adjustment significantly changes the ratio. Based on actual supply, the proportion of Bitcoins held by institutions rises to about 13.44%, meaning that for every 7.4 Bitcoins in circulation, approximately 1 is locked by institutions, ETFs, or sovereign nations.
Are institutions taking control of Bitcoin?
Does this mean Bitcoin is being controlled by institutions? Not yet. However, the influence of institutions is undoubtedly increasing, especially in terms of price behavior. Data shows that the correlation between Bitcoin and traditional stock market indices such as the S&P 500 and Nasdaq has significantly strengthened, making it gradually viewed as a 'risk-on' asset, with its price fluctuations highly correlated with traditional market sentiment.
This correlation may bring benefits during bull markets. When global liquidity expands and risk assets perform strongly, Bitcoin is expected to attract more funds than ever, especially as pension funds, hedge funds, and sovereign wealth funds start to allocate a small portion of Bitcoin in their portfolios. However, this also comes with trade-offs. The deepening institutional participation makes Bitcoin more sensitive to the macroeconomic environment, with central bank policies, bond yields, and stock market volatility becoming more important than ever.
Despite this, over 85% of Bitcoins are still not held by institutions. Retail investors still account for the vast majority of Bitcoin supply. Although ETFs and corporate treasuries may hoard large amounts of Bitcoin in cold wallets, the market remains highly decentralized. Critics argue that the value of on-chain data is diminishing, as many Bitcoins are locked in ETFs or dormant wallets, making on-chain activity difficult to reflect real dynamics. This concern has some validity, but it is not a new issue.
Adapt to the new reality.
Historically, most Bitcoin trading activity has occurred off-chain, especially on centralized exchanges like Coinbase, Binance, and (formerly) FTX. These trades are rarely recorded on-chain in a meaningful way, but they still affect prices and market structure. The current situation is similar, but with improved transparency. ETFs, corporate disclosures, and sovereign purchases are constrained by regulatory requirements to disclose holdings, providing analysts with rich tracking data.
Additionally, on-chain analysis tools are constantly evolving. For example, the MVRV-Z score is being optimized by focusing on a 2-year rolling average rather than the complete historical data, better capturing current market dynamics and filtering out the noise from lost or inactive Bitcoins.
A mature ecosystem.
Institutional interest in Bitcoin is at an all-time high, with ETFs, corporations, and sovereign entities collectively holding over 2.2 million Bitcoins, and this number continues to grow. The influx of these funds has stabilized prices during market downturns, reinforcing Bitcoin's value proposition. However, this stability also brings complexity. The ties between Bitcoin and the traditional financial system are becoming increasingly close, with stronger correlations to stock markets and macroeconomic sentiment.
However, this does not mean the end of Bitcoin's decentralization or on-chain analysis. On the contrary, as institutional holdings become more transparent, tracking the flow of funds has become more precise. Retail investors remain the backbone of the Bitcoin market, and analytical tools are becoming smarter and more responsive to market changes. The spirit of Bitcoin's decentralization is not threatened; it is simply maturing. As long as our analytical framework evolves alongside Bitcoin, we can better respond to any changes in the future.
Conclusion.
Real life is now constantly changing. Those who cannot adapt to the times will ultimately be eliminated. Moreover, in the world of cryptocurrency, a day is like a year!
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