Bitcoin’s scarcity has reached a new phase as the total mined supply surpasses the 19.96 million mark, leaving less than 1.04 million BTC to be mined. This milestone, combined with accelerated Bitcoin withdrawals from exchanges and increased adoption, is setting the stage for heightened demand. The U.S. President Donald Trump’s advocacy for a Strategic Bitcoin Reserve could further elevate the largest cryptocurrency’s value proposition.

Since November 2024, the supply of Bitcoin on exchanges has fallen by nearly 15%, according to Santiment data. During the same period, the amount of Bitcoin held in wallets outside exchanges grew from 17.99 million to 18.3 million. A reduction in exchange supply typically diminishes selling pressure and bolsters long-term price growth.

Institutional interest in Bitcoin continues to expand, with analysts projecting billions in potential demand if state-level Bitcoin reserve bills are enacted. Matthew Sigel, Head of Digital Assets Research at VanEck, estimates that institutional investors alone could drive $23 billion in demand, equivalent to roughly 247,000 BTC at current prices. This excludes the potential influx from pension funds, which could further amplify the demand curve.

President Trump’s pro-crypto stance is reflected in his proposal for a Strategic Bitcoin Reserve, a groundbreaking move likened to national reserves of gold or oil. With the U.S. government already holding nearly 200,000 BTC through FBI seizures, this initiative could transform Bitcoin into a critical asset in national economic strategy. Advocates of Bitcoin's scarcity argue that such reserves would appreciate significantly over time, adding long-term value.

Technological advancements in Bitcoin’s ecosystem, particularly with Layer 2 protocols, are also playing a pivotal role in broadening its utility. Kevin Liu, CEO of GOAT Network, noted that Bitcoin Layer 2 solutions could fuel new use cases and attract institutional players seeking to capitalize on BTC yield opportunities. He emphasized that institutional investors and individuals alike are exploring ways to generate passive income from Bitcoin holdings rather than liquidating them.

Despite the bullish developments, some market trends signal short-term caution. Santiment’s data reveals a decline in the number of active wallets on the Bitcoin blockchain, suggesting capitulation among smaller investors. This typically aligns with price recoveries as larger entities accumulate BTC during periods of retail sell-offs.

Market analysts foresee Bitcoin’s price testing its all-time high of $109,588 in February 2025, despite potential resistance at the $100,000 milestone. Technical indicators on both daily and weekly timeframes point to a recovery, with key support levels at $93,646 and $90,000. While short-term corrections remain a possibility, the long-term outlook for Bitcoin appears optimistic, bolstered by growing institutional interest and favorable macroeconomic conditions.