Bitcoin Scarcity and Rising Demand Drivers
Bitcoin has officially crossed the 19.96 million mark, meaning over 95% of the total Bitcoin supply has now been mined. With only 1.039 million BTC left to be mined, the market is bracing for a potential scarcity, especially as Bitcoin withdrawals from exchanges continue to accelerate. Data from Santiment shows that Bitcoin supply on exchanges has dropped by nearly 15% since the U.S. Presidential election results were declared in November 2024. Conversely, the supply of BTC held outside of exchanges has increased from 17.99 million to 18.3 million during the same period. This shift is widely viewed as a bullish sign, as it indicates reduced selling pressure and a stronger conviction among long-term holders. The declining supply on exchanges is now at its lowest level in nearly three and a half years, a trend that historically correlates with rising prices due to consistent demand.
Matthew Sigel, Head of Digital Assets Research at VanEck, has analyzed 20 state-level Bitcoin reserve bills and predicts that if enacted, these bills could generate $23 billion in demand for BTC. At current prices, this would translate to approximately 247,000 BTC, a figure that does not even account for potential allocations from pension funds. Sigel’s analysis underscores the growing institutional interest in Bitcoin, which is expected to be a key driver of price growth in 2025.
U.S. Strategic Bitcoin Reserve and Trump’s Pro-Bitcoin Agenda
In a move that could significantly bolster Bitcoin’s value, U.S. President Donald Trump has proposed the creation of a Strategic Bitcoin Reserve, a concept that has been widely applauded as a game-changer for the crypto industry. Traditionally, nations maintain reserves of strategic assets like gold, oil, and gas to navigate economic crises and supply shocks. If adopted, the U.S. Strategic Bitcoin Reserve would mark a historic shift in how governments view and utilize Bitcoin, effectively solidifying its role as a reserve asset.
The U.S. government currently holds nearly 200,000 Bitcoins, seized through FBI criminal investigations. While the government has previously sold its BTC holdings, the Trump administration appears less inclined to do so, particularly as the idea of a Bitcoin reserve gains traction. The finite supply of Bitcoin aligns perfectly with the “scarcity adds value” narrative, leading advocates to believe that holding BTC in reserve would appreciate in value over time.
President Trump’s pro-crypto stance and campaign have further fueled optimism, encouraging institutional investors and Wall Street bankers to explore the feasibility of adding Bitcoin to their balance sheets. David Sacks, Trump’s Crypto and AI Tsar, has emphasized the administration’s focus on this initiative, stating, “One of the first things we’re going to look at is the feasibility of a Bitcoin reserve.”
The Rise of Bitcoin Layer 2 Protocols
Bitcoin Layer 2 (L2) protocols are emerging as a critical factor in the cryptocurrency’s scalability and adoption. In an exclusive interview with Crypto.news, Kevin Liu, founder and CEO of GOAT Network, highlighted the growing importance of Bitcoin L2s, noting that they are uniquely positioned for growth due to Bitcoin’s dominance in the crypto market. Unlike Ethereum’s L2 solutions, which rely on Ether, Bitcoin L2s are fueled by BTC itself, offering a more integrated and seamless user experience.
Liu also pointed out that both institutional and individual users are increasingly looking to put their Bitcoin holdings to work without selling them. This demand for “real BTC yield” is driving the growth of Bitcoin DeFi (BTCFi), enabling users to earn passive income through their BTC holdings. The ability to use this yield for expenses or further investment is expected to play a pivotal role in the broader adoption of Bitcoin.
When asked about the altcoin market and Bitcoin’s dominance, Liu observed that Bitcoin tends to outperform altcoins during bull markets, a trend that is likely to continue. However, he emphasized that BTCFi represents a new and exciting opportunity for crypto users, offering a way to maximize the utility of their Bitcoin holdings.
Whales and Institutions: The Holders Who Refuse to Sell
Despite recent market turbulence, whales and institutional investors continue to accumulate Bitcoin, showing no signs of selling. Crypto intelligence firm Santiment reports that the number of non-empty wallets on the Bitcoin blockchain has declined by 277,240 over the past three weeks, suggesting that retail investors are selling out of fear of further price drops. However, this behavior is characteristic of “capitulation,” a phase often followed by a significant price recovery. Whales and large entities, on the other hand, are taking advantage of the current market conditions to increase their holdings, a trend that supports a bullish outlook for Bitcoin in 2025.
This divergence in behavior between retail and institutional investors highlights the maturation of the Bitcoin market. While smaller investors may be driven by short-term fear and greed, institutional players are increasingly adopting a long-term, strategic approach to their Bitcoin investments.
Bitcoin Price Forecast for February 2025
As the market looks ahead to February 2025, Bitcoin’s price forecast remains highly optimistic. Derivatives market data from Derive.xyz indicates that traders are cautiously optimistic, with 47.3% of all premiums being calls sold and 24.4% being calls bought. This suggests that while there is some expectation of upside, the market is not overly speculative at present.
Dr. Sean Dawson, Head of Research at Derive.xyz, has provided a detailed technical analysis of Bitcoin’s price trends. He notes that Bitcoin’s At-the-Money (ATM) 7-day Implied Volatility (IV) dropped by 7 percentage points, from 47% to 40%, over the past 24 hours. This reduction in volatility, combined with the improving odds of Bitcoin reaching $125,000 by June 27 (now at 44.4% compared to 41.9% previously), paints a positive picture for the asset’s near-term prospects.
From a technical standpoint, Bitcoin’s daily and weekly price charts suggest a strong bullish thesis. On the daily timeframe, the Relative Strength Index (RSI) is currently at 44 and rising, while the Moving Average Convergence Divergence (MACD) indicates that negative momentum is waning. Bitcoin is expected to test its all-time high of $109,588, with key resistance levels at $100,000 and support levels at $93,646 and $90,000. On the weekly timeframe, Bitcoin is just 13% away from its all-time high, and while there are signs of potential correction, the overall outlook remains bullish.
Conclusion: A Bright Future for Bitcoin
The combination of dwindling Bitcoin supply, increasing institutional adoption, and technological advancements such as Layer 2 protocols paints a highly optimistic picture for Bitcoin’s future. The proposed U.S. Strategic Bitcoin Reserve and the growing interest from institutional investors further reinforce the asset’s potential for long-term growth. While short-term market fluctuations are inevitable, the underlying fundamentals of Bitcoin suggest that 2025 could be a breakout year for the digital asset.
