Bitcoin Turns Deflationary as Strategy’s BTC Purchases Surpass Miner Supply: CryptoQuant

Highlights:

• Strategy’s 555,000 BTC holdings create a -2.23% deflation rate, reducing available supply. 
• Strategy’s daily Bitcoin buy rate surpasses miner output, boosting potential price surge.
• Coinbase rejected a Saylor-like BTC strategy to manage risk and protect funds.

Bitcoin has a fixed supply of 21 million coins, but that doesn’t make it deflationary. New BTC is mined every day, and none is destroyed, which is the contrary of deflation. By definition, a deflationary asset is one whose supply decreases over time, leading to increased scarcity. However, according to CryptoQuant CEO Ki Young Ju, Strategy and its co-founder Michael Saylor have effectively turned Bitcoin into a deflationary asset through aggressive accumulation, reducing the amount of BTC available on the open market.

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In a May 10 X post, Ki Young Ju said Strategy is buying Bitcoin faster than miners can produce it. He pointed out Strategy’s 555K BTC is locked and not for sale. These holdings alone contribute to a -2.23% deflation rate, with the potential for more deflation from other institutional investors. Michael Saylor, co-founder of Strategy, is a strong BTC advocate. He promotes the digital currency to investors and has encouraged other companies to adopt Bitcoin treasury plans.

#Bitcoin is deflationary.@Strategy is buying BTC faster than it's mined. Their 555K BTC is illiquid with no plans to sell. MSTR's holdings alone mean a -2.23% annual deflation rate—likely higher with other stable institutional holders. pic.twitter.com/9VKT3IdcYo

— Ki Young Ju (@ki_young_ju) May 10, 2025

The company began its significant Bitcoin purchases in September 2020 when it was still named MicroStrategy, with Saylor as CEO. Bitcoin was hovering just above $10K at the time. The NASDAQ-listed firm acquired 21,454 BTC through 78,388 off-chain transactions. The next year, Bitcoin’s price soared to nearly $70,000, and the company kept buying.

After the FTX crash and other industry issues, Bitcoin’s price fell below $20,000. Despite this, the firm continued to accumulate, even though its holdings were losing value. The 2024 US elections boosted Strategy’s confidence, and the firm now holds 555,450 BTC, worth nearly $58 billion at current prices. 

Strategy’s High Demand Could Lead to Bitcoin Supply Crunch and Price Surge

Adam Livingston, author of The Bitcoin Age and The Great Harvest, recently said that the strategy is synthetically halving Bitcoin by outpacing miner supply with high demand. He noted that while miners collectively produce around 450 BTC daily, Strategy acquires an average of 2,087 BTC per day, more than four times the daily miner supply.

He stated:

“When Bitcoin becomes this scarce, access to Bitcoin will require paying a premium. Lending against Bitcoin will cost more. Borrowing Bitcoin will become a luxury business reserved for nation-states and corporate whales, and Strategy will control the bottleneck.”

The author predicts that Bitcoin prices could rise significantly if Strategy keeps buying at its current pace. This will happen as demand from institutional and retail investors increases, leading to a supply crunch.

Strategy is synthetically halving Bitcoin and will set the cost of capital for the next 100 years.

Most people think the Bitcoin supply curve is sacred.

Fixed. Immutable. Untouchable.

They're wrong.

Strategy is manually rewriting Bitcoin’s scarcity schedule right now with…

— Adam Livingston (@AdamBLiv) April 27, 2025

Coinbase Considered Adopting Saylor-Like BTC Strategy Before Deciding Against It

Coinbase rejected Michael Saylor’s Bitcoin strategy multiple times, fearing it could negatively impact the exchange, Bloomberg reported. CEO Brian Armstrong said they considered putting 80% of their balance sheet into Bitcoin but chose against it to manage risk and protect the company’s cash position.

Coinbase CFO Alesia Haas explained that the firm avoided competing directly with its customers on which cryptocurrencies would perform best. She also mentioned that Coinbase isn’t stopping its investments, noting that the firm purchased $153 million worth of crypto assets in Q1, mainly Bitcoin. BitcoinTreasuries.net reports that Coinbase holds 9,480 BTC, valued at $988 million, making up the majority of its $1.3 billion in crypto assets.

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