Research shows that retail investors' demand for Bitcoin will surpass newly mined supply within eight years.

Compared to the supply side, changes in the demand side are important parameters for evaluating the value of cryptocurrencies. The cryptocurrency exchange ZUBR uses data provided by Chainalysis to speculate on the future changes in market demand for Bitcoin over the next eight years. The research shows that by 2028, the daily average demand for Bitcoin from retail investors will be equivalent to the daily newly mined supply of Bitcoin.

The Supply and Demand of Bitcoin

Almost all investors are aware that there is a limit set on the supply of Bitcoin when the system was built, ensuring the scarcity of Bitcoin in the market. However, the limitation on the supply side alone cannot be considered as Bitcoin's value proposition. When evaluating the value of cryptocurrencies, changes in demand are a more important parameter.

In light of this, the cryptocurrency derivatives exchange ZUBR used data provided by the blockchain analysis company Chainalysis to speculate on the future changes in the market demand and supply of Bitcoin over the next eight years. The changes on the supply side of Bitcoin are relatively straightforward, as the Bitcoin system reduces block rewards every 210,000 blocks (approximately every four years) to decrease the daily newly mined Bitcoins and avoid inflation issues. This setting was established when the Bitcoin system was built and is essentially unchangeable. In contrast, factors affecting the demand for Bitcoin are complex and can only be predicted through current or historical data. ZUBR stated in a report:

“While valuing Bitcoin's actual price solely based on mining data or network adoption rates is quite challenging, the growth of these two data points typically drives the willingness of retail investors to hold Bitcoin.”

The Intersection of Demand and Supply

To conduct a more in-depth study on the future demand for Bitcoin, ZUBR used on-chain data provided by Chainalysis for analysis. The data shows that the number of Bitcoin addresses holding between 1 to 10 BTC has only experienced negative growth for five months since 2011, with the number of addresses holding 1 to 10 BTC increasing on average every month, growing by 11% from the beginning of this year.

The report claims that the total value of these addresses reached $5 billion in June this year. Based on the growth rate of Bitcoin on the demand side from the past to present, ZUBR predicted the market demand for Bitcoin over the next eight years. The company claims that when the daily supply of Bitcoin halves to 450 BTC in 2024 (currently at 900 BTC per day), retail investors may consume more than 50% of the daily supply.

Furthermore, if this demand continues to grow as expected by ZUBR, by 2028, the daily average demand for Bitcoin from retail investors will equal the daily newly mined Bitcoin supply.

Key Pillars of Bitcoin Demand

During the financial crisis caused by the novel coronavirus, the global gold market faced shortages and transportation delays due to work stoppages, resulting in significant price discrepancies. ZUBR believes that Bitcoin, being delivered electronically, is not constrained by these supply chain limitations.

Additionally, ZUBR attributes Bitcoin's success over the past decade to value investors with long-term faith, who invest regularly regardless of the price, creating a strong foundation for Bitcoin demand. ZUBR stated:

“Compared to the gold and stock markets, Bitcoin is still in its early stages. However, data shows that despite the price volatility, cryptocurrency believers still firmly believe it (Bitcoin) is a true value storage tool.”