Bitcoin ETFs to lock up 1.5 million BTC by New Year as supply squeeze tightens grip

Bitcoin spot exchange-traded funds are on pace to hold more than 1.5 million BTC by year-end if current inflow rates persist, according to holdings data tracked by WalletPilot. This would allocate more BTC to ETFs than most estimates for lost coins, which stand around 1.4 million BTC.

U.S. spot ETFs collectively hold about 1.296 million BTC as of August 13, equivalent to nearly 6.5% of the circulating supply. The past 30 days saw net additions of approximately 17,393 BTC across all funds, a run rate that, if sustained, would push total ETF holdings past the 1.5 million mark by December.

BlackRock’s iShares Bitcoin Trust accounts for the largest share, with roughly 744,500 BTC under management. This position represents about 3.3% of total Bitcoin supply and has been built since the fund’s January 2024 launch.

At an average pace of roughly 4,300 BTC added per month in recent months, IBIT alone could add around 130,000 BTC to its reserves by year-end if flows remain steady, further concentrating holdings within a single issuer.

ETF accumulation has coincided with Bitcoin’s move to fresh record highs around $124,000, a level reached amid expectations that the Federal Reserve will begin cutting interest rates later this year.

These funds have attracted over $50 billion in assets under management in a little over a year. The steady inflows have outpaced new Bitcoin issuance from mining, which stands near 450 BTC per day after the April 2024 halving, tightening the available float in secondary markets.

In a flat inflow scenario at the current monthly average, ETFs would add approximately 70,000 BTC to cumulative holdings by year-end. For instance, if flows were to accelerate, doubling to around 34,000 BTC per month, ETF reserves could exceed 1.6 million BTC.

Such scenarios would deepen the impact on tradable supply, potentially increasing the price sensitivity to macroeconomic developments and fund-specific investor flows.

The concentration of holdings within a handful of funds also has implications for market structure. With ETF baskets holding large amounts of Bitcoin that are not directly redeemable for underlying coins by most shareholders, the effective liquidity available on exchanges could remain constrained even if secondary market ETF shares change hands. This dynamic may shape price discovery as ETF demand becomes a larger share of aggregate trading volume.

While inflows have been consistent in recent months, they are not guaranteed to continue at the same pace. Net flows could slow or reverse if macro conditions shift or if profit-taking increases at higher prices. Regulatory developments, such as the adjustments to ETF redemption mechanisms or broader changes to securities law, also remain variables that will likely affect the trajectory.

The next four months will determine whether spot ETFs cross the 1.5 million BTC threshold. At present rates, the milestone appears within reach, adding another layer to the interplay between institutional products and the underlying digital asset supply.

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