BlackRock Warns: Bitcoin Supply Shock Ahead

BlackRock warns that the Bitcoin shortage is more serious than people think, predicting that if every millionaire in the US only wanted one BTC, supply would not be enough to meet demand.

BlackRock: Not Enough Bitcoin for Every Millionaire

BlackRock, the world's largest asset manager, released a report on 26 February highlighting the potential role of Bitcoin in investment portfolios. The report, authored by Brett Wager and Michael Gates, highlights Bitcoin's ability to improve diversification, stating:

"As creators of multi-asset portfolios, we believe Bitcoin has long-term investment value for some investors and can provide unique and incremental sources of diversification for portfolios."

The authors point to geopolitical instability, rising public debt and excessive government spending as factors that could further stimulate interest in BTC. They also highlight how regulatory changes could remove barriers to innovation, stating:

"A more Bitcoin-friendly administration could remove regulatory bottlenecks, potentially unleashing a wave of cumulative innovation and infrastructural development."

The Impact of ETPs and the Scarcity of Bitcoin

The report highlights the impact of Exchange-Traded Products (ETPs), launched in 2024, which have seen significant inflows since then. According to BlackRock, increased institutional participation could stabilise Bitcoin's historic price volatility. Moreover, the authors highlight the cryptocurrency's scarcity, explaining that its actual circulating supply is below the theoretical limit of 21 million.

"It is less commonly known that the actual supply available is likely to be much lower, with a conservative estimate of 3-4 million Bitcoins issued, visible on the blockchain but considered permanently inaccessible (and therefore out of circulation) due to lost, forgotten or destroyed keys."

The report adds:

"To illustrate how few Bitcoins are actually available, if every millionaire in the US asked their financial advisor to buy 1 Bitcoin, there would not be enough."

Bitcoin: Intrinsic Value and Institutional Adoption

Responsing to scepticism about Bitcoin's intrinsic value, BlackRock retorts to critics who argue that the cryptocurrency lacks fundamental value.

"Critics often repeat that Bitcoin has no intrinsic value. On the contrary, in our view, the intrinsic features discussed represent real and attractive sources of value that we expect to be recognised by more and more people in more and more places over time - especially in a debt-laden, digital-first and increasingly AI-driven world."

The report presents Bitcoin as a resilient asset with a fixed supply, a decentralised infrastructure and growing institutional adoption, making it an increasingly relevant investment option in today's evolving financial landscape.