BlackRock’s substantial Bitcoin acquisitions raise supply crunch concerns

Pro-Bitcoin advocate “InvestAnswers” recently unveiled a startling revelation about BlackRock’s substantial Bitcoin acquisitions, sparking concerns of a looming supply crunch. BlackRock, one of the world’s largest asset management firms, reportedly absorbed a staggering 11,500 BTC from the market in just two days, representing a significant chunk of the daily Bitcoin supply.

BlackRock’s massive Bitcoin accumulation

InvestAnswers’ post highlighted that the 11,500 BTC withdrawal accounts for about 13 days’ worth of Bitcoin production, considering that approximately 900 BTCs are issued daily. This accumulation by BlackRock amounts to approximately $500 million at Bitcoin’s market value. 

Furthermore, data suggested that BlackRock’s spot ETF only captured an average of 25% of the overall volume of Bitcoin ETFs over the same two-day period. Factoring in this information, a total of 46,000 BTC was estimated to be removed from the market within the specified timeframe.

If BTC accumulation through ETFs continues at a daily withdrawal rate of 23,000 BTC, U.S. ETFs accumulate Bitcoin at 25.56 times the daily production. It’s important to note that besides U.S. ETFs, retail investors, other global ETFs, and market participants also have a growing need to stock BTC. This accumulation trend could lead to a severe supply crunch in the Bitcoin market.

Bullish outlook amidst supply concerns

Despite concerns of a supply crunch, InvestAnswers concluded his commentary on a bullish note, urging crypto market participants to ignore temporary price fluctuations. He believes the projected supply crunch could be pivotal in sending Bitcoin’s market to new astronomical price limits.

Institutional OTC trading as a mitigation strategy

A commenter raised the point that institutions like BlackRock often engage in over-the-counter (OTC) trading, often referred to as the black pool, as a strategic move to mitigate market volatility. This strategy allows institutions to acquire large quantities of Bitcoin without causing significant price fluctuations on the open market.

The commenter cited Coinbase, one of the custodial platforms for Bitcoin ETF issuers, which reportedly holds a substantial $7 billion worth of Bitcoin in the OTC market. This suggests that the impact of the continuous accumulation of Bitcoin by institutions may not be immediately apparent on public exchanges.