US Bitcoin ETFs now hold 5% of total supply: How far are we from the Wall Street takeover?

Bitcoin, the once-rebellious digital asset born to disrupt traditional finance, is slowly becoming a trophy in the hands of institutions.

US Bitcoin exchange-traded funds (ETFs) now hold more than 1 million Bitcoin, which equals 5% of the total supply. That’s nearly the same amount reportedly sitting in the untouched wallet of Satoshi Nakamoto, the crypto’s own creator.

With Wall Street increasing its grip on Bitcoin and talks of a US government Bitcoin stockpile gaining traction, the crypto community is teetering on the edge of a new era—one that looks eerily like the financial systems Bitcoin was meant to free us from.

US ETFs aren’t the only players though. Michael Saylor’s MicroStrategy continues to relentlessly hoard Bitcoin too, with its holdings valued at $38 billion.

Meanwhile, Senator Cynthia Lummis is pushing legislation that proposes selling some of the Federal Reserve’s gold to buy 1 million Bitcoin, creating a national cryptocurrency reserve. If passed, this would make the US government one of Bitcoin’s largest whales.

Wall Street, Trump’s agenda, and a shrinking supply

Bitcoin ETFs were an impossible dream a decade ago. Now, they’re scooping up Bitcoin faster than miners can produce it. This institutional gold rush means Bitcoin is no longer a playground for tech libertarians and crypto-anarchists. It’s a hunting ground for financial giants.

Enter Donald Trump. The president-elect wants to create a US Bitcoin stockpile. The government already holds over 200,000 Bitcoin, seized from criminals. Polymarket, a crypto-based predictions platform, gives it a 28% chance of happening in Trump’s first 100 days.

If it passes, the market could become more volatile. A change in administration or policy could trigger massive sell-offs, crashing the price of Bitcoin and wiping out value for holders.

Now Lummis’ plan is simple but controversial. The Federal Reserve would sell gold (about $690 billion worth at today’s prices) and use the proceeds to buy Bitcoin. On paper, this is feasible. The proposed purchase of 1 million Bitcoin would cost about $100 billion at current prices.

But that will also destabilize markets. Selling large amounts of gold could drive its price down, while the mere announcement of such a Bitcoin purchase could send crypto prices skyrocketing.

Mark Connors, founder of Risk Dimensions, warns of concentration risk. “Will this be a risk of being concentrated by existing G-10, G-20 countries, or institutions like BlackRock?” he asked. This is a bitter pill for Bitcoin’s early adopters to swallow.

Dangers of the growing influence

According to research from Glassnode, 65% of all Bitcoin in circulation hasn’t moved in over a year. This includes coins in ETFs, corporate treasuries, and even forgotten wallets. Satoshi Nakamoto’s legendary 1.1 million Bitcoin, likely to be untouched forever, adds to this immobile supply.

Bitcoin’s supply problem is hardwired. Miners produce about 164,250 Bitcoin annually, far less than what ETFs and institutional buyers demand. This creates a perfect storm of shrinking supply and skyrocketing demand.

Edward Chin, co-founder of Parataxis Capital, explained it best: “Add buyers coming through ETFs, sovereign wealth funds, and institutional investors, and there just won’t be enough Bitcoin to meet demand unless prices rise significantly.”

What this means for Bitcoin’s price

Analysts now see $500,000 as a conservative target. Some even suggest $1 million, especially if governments start buying in bulk. Chin believes Bitcoin could become part of the global monetary base, much like gold.

Matt Hougan, chief investment officer at Bitwise, has noticed a surge in interest from institutional investors. “Starting in early October, 40% of the meetings I had with registered investment advisers and institutions resulted in allocations,” he said. This is a sharp increase from just 10% earlier in the year. 

VanEck’s Matthew Sigel shares this sentiment, saying that RIAs are scrambling to include Bitcoin in their portfolios. At press time, Bitcoin was worth $97,219 and is believed to currently be in correction after hitting a high of over $99,000 some days ago.

Land a High-Paying Web3 Job in 90 Days: The Ultimate Roadmap