BlackRock Warns: Not Enough Bitcoin for Everyone

The world’s largest asset manager, BlackRock, has shared a striking analysis in their report “Why Bitcoin? A perspective from model portfolio builders“. Analysts Michael Gates and Brett Wager argue that Bitcoin (BTC) has a unique characteristic: it is inelastic in terms of demand, in stark contrast to gold. While gold production can scale up with increasing demand, Bitcoin is stuck with a hard limit of 21 million tokens, scheduled until 2140. But the real story lies in the details: of those 21 million, an estimated 3 to 4 million BTC are permanently lost – due to forgotten keys, broken hardware, or other misfortune. This makes the available supply even tighter than many people think.

A Simple Calculation

To illustrate this: in the US, there are about 22 million millionaires (according to UBS’s Global Wealth Report 2024). If every millionaire wanted 1 BTC, you would already reach 22 million BTC – more than will ever exist. Even if you only look at the approximately 3,000 billionaires in America, with their immense capital, their demand could flood the market. BlackRock’s point? There simply isn’t enough Bitcoin to meet this potential demand. This underscores BTC’s scarcity, a characteristic that they believe distinguishes it as a store of value.

Why Bitcoin?

BlackRock’s Model Portfolio Solutions team sees “substantive arguments” for BTC’s long-term value. The report cites three pillars:

1. Store of value and monetary alternative: BTC’s fixed supply makes it a hedge against inflation and dollar dominance.
2. Political and geopolitical hedge: In times of instability, Bitcoin can be a safe haven, independent of government control.
3. Digital transition: BTC benefits from the shift to an online economy, reinforced by younger generations embracing crypto.

This mix offers “unique risk premiums and diversification” for traditional portfolios, say Gates and Wager. It’s not a replacement for bonds, but a supplement – a point that BlackRock already made in their 2025 Global Outlook.

What Does This Mean?

The timing is spicy. Bitcoin dropped to $82,000 today after Trump’s tariff move on Canada and Mexico, a steep drop from $93,000 yesterday. But Hayes’ KISS of Death blog predicts that this kind of chaos – and the Fed’s response with low interest rates and liquidity – could ultimately push BTC to $1 million. BlackRock’s report aligns with this: if institutional demand grows, and billionaires get in, scarcity could trigger a price explosion. For now? The market is bleeding, but the fundamentals remain. Keep your eyes open – this is just the beginning.