Bitcoin now deflationary due to Strategy's BTC purchases — Analyst

Strategy, a Bitcoin treasury company co-founded by Michael Saylor, is accumulating Bitcoin at a rate faster than the total daily miner output, effectively making Bitcoin deflationary with an estimated annual deflation rate of about -2.33%.

Strategy currently holds approximately 555,000 BTC, which is considered illiquid with no plans to sell, thereby removing a significant portion of Bitcoin supply from circulation.

This aggressive accumulation surpasses the collective daily miner output of roughly 450 BTC, with Strategy reportedly buying around 2,087 BTC per day-over four times the miners' daily production.

This dynamic is described by analysts as a "synthetic halving" of Bitcoin supply, as the demand from Strategy and other institutional holders outpaces new Bitcoin creation, tightening supply and potentially driving price appreciation.

Strategy also bridges Bitcoin with traditional financial markets by raising capital which it uses to fund further Bitcoin purchases. Over 13,000 institutions reportedly hold Strategy stock, indicating broad institutional exposure to Bitcoin via this vehicle.

The impact of Strategy's accumulation is significant in altering Bitcoin market dynamics by restricting available supply, encouraging institutional adoption, and reducing price volatility. However, broader institutional participation is expected to increase only after clearer cryptocurrency regulations are established in the United States.

Strategy's large-scale BTC purchases have shifted Bitcoin into a deflationary state by absorbing more new supply than miners produce, thereby reducing circulating supply and influencing market behavior toward higher prices and lower volatility.

Not a financial advice.

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