Bitcoin: Shrinking Supply, Institutional Demand Driving Its Transformation Into Monetary Infrastructure

Cryptocurrency
Written By Alexander I. Velasquez
Bitcoin symbol overlaid with blockchain network graphics beside the illuminated U.S. Capitol building at night.

Excerpt

The following is a 250-word excerpt from my full article on Seeking Alpha: A crowdsourced financial market content service where investors can share ideas, discuss news, and make informed investment decisions. To view the full article without a paywall, please click on the link below:
https://seekingalpha.com/article/4842335?gt=2dc98df5153e2c3b

Summary

  • Bitcoin’s circulating supply continues to contract as ETFs, corporate treasuries, and long-term holders absorb a growing share of total coins.

  • Bitcoin’s role as collateral and benchmark asset across stablecoins and lending products is expanding its monetary premium.

  • The SEC’s in-kind redemption approval allows ETFs to hold Bitcoin directly, thereby reducing liquidity and slowing market velocity.

  • Upcoming spot ETF approvals in South Korea and Japan could remove hundreds of thousands of additional coins from circulation.

  • These structural shifts support a long-term valuation framework that point to significant upside through 2030.

Investment Thesis

I give Bitcoin (BTC-USD) a strong buy rating because its long-term value is being driven by three major forces: a shrinking circulating supply, its status as a benchmark reserve asset for the greater crypto economy, and its growth as a monetary premium across various institutional products. More than 73% of Bitcoin is being held long-term, and an additional 15% has been absorbed by ETFs, corporate treasuries, and governments, thereby slowing its velocity and tightening its effective float. There are two catalysts reinforcing this trend: first, there's the upcoming approval of spot ETFs in South Korea and Japan, which would bring hundreds of thousands of coins into custody, and, second, there's the SEC's recent approval of in-kind redemptions for Bitcoin that are moving it into ETF vaults as opposed to going through exchanges. Put together, all these forces are reducing Bitcoin's circulation, thereby both expanding its role as global collateral as well as increasing its intrinsic value under the quantity theory of money valuation framework I use below. Based on all these factors, I give a base-case fair value to Bitcoin of $229,000 by 2030…

Alexander I. Velasquez

Alexander I. Velasquez is a financial analyst specializing in valuation, market history, and long-term investing. His research combines fundamental analysis with lessons from past financial crises. His work is published on Seeking Alpha.

https://www.aivelasquez.com/
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