Why Bitcoin’s Greatest Advantage Might Pose a Significant Risk

A recent report from Fidelity Digital Assets offers intriguing insights. Research analyst Zack Wainwright has thoroughly examined how Bitcoin’s illiquid supply is paving the way for a new phase for investors, driven by two primary factors: early adopters retaining their sats for extended periods and a surge of publicly traded companies acquiring as much BTC as they can manage.

The author suggests that this could signify “a new era in Bitcoin’s history,” particularly as Satoshi Nakamoto’s holdings of 1.1 million BTC now surpass the remaining coins available for mining. Highlighting how the early crypto landscape featured faucets where individuals could claim 5 BTC for free — a value that now exceeds $500,000 — Wainwright indicates that scarcity will soon take the place of abundance.

While the overall tone is optimistic, there is a significant detail within the report that merits attention: the race to amass Bitcoin on a large scale could ultimately have adverse effects, leading to unprecedented price pressures if treasury companies opt to liquidate portions of their holdings to realize profits.

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Considering the returns they have experienced over the past year, one could argue that it would be unwise not to. As the report states:

“As of June 30 2025, this cohort held over $628 billion at a Bitcoin price of $107,700 — more than double the value held at this time last year. With such substantial unrealized gains, the question arises: Will these holders begin to take profit? Early signs of potential capitulation may already be emerging, as 80,000 ancient Bitcoin — BTC that has not moved for 10 years or more — were sold in July 2025.”

Wainwright further cautions that the sudden movement of large quantities of illiquid BTC could unsettle the markets. This scenario is not unprecedented. When Tesla announced plans to sell a significant portion of its holdings a few years back, Bitcoin experienced a sharp decline, with some interpreting this action as a signal that Elon Musk was losing faith in the digital asset’s potential.

Nevertheless, the author’s outlook remains largely favorable. Fidelity’s projections indicate that whales who have held Bitcoin for a minimum of seven years — along with firms possessing at least 1,000 BTC in their wallets — will collectively control over six million coins by the end of this year. He points out that this represents 28% of the total supply. Furthermore, considering that millions of coins have already been lost (exact figures vary), this implies an even smaller amount available for everyday investors.

Highlighting the resilience of whales — and their commitment to retaining assets through both bear and bull markets — he noted:

“The first cohort — Bitcoin last moved seven or more years ago — has proven to be highly illiquid, as their total portion of the Bitcoin supply has increased every quarter-over-quarter since tracking became possible in 2016.”

Image: Fidelity Digital Assets

This is a noteworthy statistic. Although publicly traded companies have not been accumulating BTC for the past seven years (MicroStrategy began its acquisitions five years ago), they appear to exhibit similar levels of determination.

“This cohort has only experienced one quarter-over-quarter decrease in total supply since 2020, and it collectively holds over 830,000 BTC as of June 30, 2025.”

However, there is a concern: most of these acquisitions have occurred quite rapidly — within the last 12 months. In the third quarter of 2024, the total amount of Bitcoin acquired by these businesses had barely surpassed 300,000 BTC.

MicroStrategy’s strategic choice to begin accumulating BTC at significantly low prices means that its average cost per coin remains relatively low — approximately $73,913 as of its latest acquisition on Monday. This indicates that prices could decline by over 30% from current levels, and Michael Saylor’s enterprise would still be profitable.

Other, later adopters do not share this advantage, with some entering the market only after Bitcoin has surpassed $90,000 or even $100,000. This places them at greater risk in the next inevitable downturn. It is important to remember that BTC plummeted by more than 75% between 2022 and 2023 in the year following the FTX collapse. Forced selling could exacerbate this bear market.

Wainwright posits that BTC’s recent surge to new all-time highs of $124,000 is directly attributable to “new demand coupled with a fixed supply and decreased issuance schedule” — and there remain additional untapped opportunities.

“Over time, the scarcity of Bitcoin may become the focal point as more entities buy and hold the asset long term. If nation-state adoption increases and the regulatory environment surrounding Bitcoin continues to evolve, the growth of the illiquid supply could be even more dramatic than what has been detailed above.”

However, it is crucial to remember: BTC buyers can quickly become sellers.

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