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Bitcoin’s real supply is far lower than 21 million, as millions of BTC are permanently lost or inaccessible.
Long-term holders control most BTC, keeping large amounts out of active trading.
Spot Bitcoin ETFs and corporate treasuries are locking up supply for the long term.
Bitcoin’s fixed supply of 21 million coins is starting to affect the market through increased volatility. While this number is correct at the protocol level, it creates a misleading picture of the amount of BTC actually available to buy or sell.
The supply that can actually enter the market is far smaller. Lost coins, long-term holders, declining exchange balances, institutional custody, and dormant wallets collectively remove millions of coins from Bitcoin's available supply. Hidden scarcity is a major driver of price movements and market behavior.
A significant portion of the Bitcoin supply is irretrievably lost. Early users stored coins on non-functional hard drives, forgot passwords, or misplaced private keys before BTC had any real value. Once private keys are lost, the assets attached to them can never be recovered.
Current estimates range from 2.3 million to 3.7 million BTC permanently lost. This represents roughly 11 to 18 percent of the total maximum supply. These coins still show up in the total supply count, but they will never return to circulation. That means the real maximum usable supply is already far below 21 million.
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Another significant part of the supply is locked up by long-term investors who rarely, if ever, sell. On-chain data indicates that more than 14 million BTC can be classified as illiquid, stored in wallets that historically do not move coins during normal market conditions.
Many of these holders have kept their Bitcoin untouched for years, even through major price swings. Coins that do not move for long periods are effectively removed from the market. While they technically exist, they do not contribute to daily trading liquidity. This leaves a much smaller pool of BTC available to respond to new demand.
Bitcoin supply held on exchanges is considered highly liquid and can be sold at any time. During the last year, exchange balances have plunged. Over 400,000 BTC have been withdrawn from centralized exchanges, representing around 2 percent of the total supply.
This represents a movement toward self-custody, long-term storage, and institutional custody solutions. With fewer coins on exchanges, there's less Bitcoin available to sell immediately. When demand increases, the price must rise more quickly as supply cannot catch up in time.
Institutional participation has evolved the supply structure of BTC. Spot Bitcoin ETFs, corporate treasuries, and regulated custodians hold hundreds of thousands of units. These types of entities usually operate with long-term strategies and under strict rules.
Bitcoin ETFs are backed by physical coins stored with custodians, which rarely move. Corporate treasuries also hold BTC for a long-term position rather than trading. While these coins still form part of the circulating supply, they are locked and not available for daily market activity.
A large number of Bitcoin wallets generated in the early years of the network have remained inactive for over a decade. Some of those are attributed to some early miners or adopters who have gone on to stockpile large amounts for very low prices. Others might be lost forever.
Several wallets from the earliest days of Bitcoin moved tens of thousands of BTC after being inactive for over a decade. These events drew attention to the rare occurrence that can briefly impact investor sentiment. Most, if not all, early-era wallets remain inactive, which keeps a significant chunk of Bitcoin out of circulation.
Illiquid supply is not a fixed entity. At times, long-term holders also sell their coins. In 2025, roughly 62,000 BTC was transferred out of the wallets of long-term holders in a short period. These movements usually happen during strong price rallies, legal events, or major changes in market conditions.
These fluctuations do little to detract from the broader trend. Long-term holders still hold the majority of the supply, and the amount of Bitcoin classified as illiquid has remained historically high. This short-term shift does little to change the big-picture scarcity narrative.
The difference between total supply and available supply significantly shapes price behavior. When only a tiny amount of Bitcoin is actively trading, even relatively small buying pressure can drive prices upward. At the same time, abrupt selling often triggers sharp drops as order books are thinner.
This is one reason why Bitcoin price tends to experience more substantial volatility compared to other traditional assets. The movements within it are not driven by the full supply of 21 million, but by a much smaller pool of coins that actually move.
Reduced supply also introduces other risks. Concentration of Bitcoin into large custodians, ETFs, or institutional wallets-legal actions, changes in regulations, or security incidents can suddenly remove massive liquidity from the market.
Technological developments or legal changes that allow access blocking or locked wallets could add supply again. The bottom line is that custody trends and on-chain behavior need to be monitored to understand how the available supply can change over time.
Also Read: Top 10 Bitcoin ETFs and Their Fees in 2025
The actual market supply of Bitcoin is only a fraction of what appears on paper. Between permanently lost coins, long-term holdings, declining exchange balances, institutional custody, and early wallets that never moved, millions are effectively out of circulation.
It is this hidden inelasticity that explains why Bitcoin often overreacts to changes in demand and why price action sometimes appears to decouple from more traditional supply models. As adoption continues and more Bitcoin is locked in long-term storage, the available supply gap might continue to widen.
1. Why is Bitcoin’s available supply lower than 21 million?
As millions of BTC are permanently lost, held long term, or locked in ETFs, corporate treasuries, and cold storage, they are unavailable for trading.
2. How much Bitcoin is estimated to be lost forever?
Estimates suggest between 2.3 million and 3.7 million BTC are permanently lost due to forgotten keys and destroyed wallets.
3. What role do Spot Bitcoin ETFs play in reducing supply?
Spot Bitcoin ETFs hold physical BTC in custody for long-term investment, removing large amounts of coins from daily market circulation.
4. Do long-term holders ever sell their Bitcoin?
Yes, but rarely. Most long-term holders keep BTC for years, selling only during exceptional market or personal events.
5. How does lower available supply affect Bitcoin’s price?
With fewer coins available to trade, even small increases in demand can cause sharper price movements and higher volatility.
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