Bitcoin to face scarcity in the near future; Know why
2025-02-14
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The mining of the largest cryptocurrency has gone over the 19.96 million mark, which clearly shows that more than 95% of BTC is so far in circulation. And, if this major amount of BTC is already in circulation then it could face a scarcity led by quick BTC withdrawals from different exchanges. 
The 47th President of the United States, Donald Trump has plans to set up a strategic Bitcoin reserve and advancements like institutional adoption and Layer 2 launch on Bitcoin could create demand for the virtual asset. 
The supply of Bitcoin on different exchanges went down by around 15% after the declaration of the US election result. During that same time, supply out of the exchanges has gone up from 17.99 million to 18.3 million, as per Santiment data. 
Normally, a slump in supply on exchanges and a boost in BTC tokens held by wallets outside the exchanges is said to be a bullish sign for the virtual asset. The volume of Bitcoin possessed over exchanges has struck its lowest level in around three and a half years. Reserves helpful in handling supply shocks
The slump in exchange supply relieves selling pressure and the constant demand skyrockets the prices, as per the historical trend shown in the charts. The head of digital assets research at VanEck, Matthew Sigel reviewed 20 state-level BTC reserve bills. 
As per the prediction of Sigel, if bills are passed, then the traders of BTC could anticipate $23 billion in demand for the largest cryptocurrency. The Strategic Bitcoin Reserve to be established in the United States by the 47th President is said to be the game-changer of the crypto industry. 
Generally, a reserve asset is used at the time of any crisis to handle the supply shocks easily. This is also a reason to have a Bitcoin Reserve, so it strengthens the demand for the token from the United States of America. 
At present, the total number of BTC held by the US govt is 200,000, mainly captured by criminal scrutiny held by the Financial Bureau of Investigation. 
Scarcity adds worth 
The restricted supply of Bitcoin is supported by some advocates who trust that scarcity adds worth and that possessing BTC tokens in reserve would respect the value in the long run. 
As the president backs Bitcoin and other virtual assets in his pro-crypto stand and campaign, institutional investors as well as Wall Street Bankers are scrutinizing the feasibility of adding the asset to their balance sheet. 
David Sacks, Trump’s senior advisor said one of the first things we are going to seek is the feasibility of a BTC reserve. 