Bitcoin, the largest cryptocurrency, is pre-programmed to have a maximum supply of only 21 million coins. This structure implies that new bitcoins are continuously mined—approximately 450 BTC daily—so, at first glance, one might argue that Bitcoin’s model is not deflationary. In fact, it seems to be the opposite; no coins are destroyed in the traditional sense, thus maintaining its circulating supply.
However, recent insights by Ki Young Ju, CEO of CryptoQuant, shed light on a unique perspective that positions Bitcoin as a deflationary asset, largely driven by the strategic initiatives of Michael Saylor, co-founder of the company Strategy.
Is BTC Deflationary?
Deflation, by definition, occurs when the supply of an asset is designed to decrease over time. The daily production of newly minted Bitcoin does not align with this definition. For instance, alternatives such as Binance Coin (BNB) have implemented burn mechanisms to actively reduce their total supply from 200,000 to 100,000. Ethereum has also explored this angle, but its effectiveness remains a point of contention.
In the case of Bitcoin, the spotlight falls on Michael Saylor and his strategic purchasing power, as detailed by Ju. Despite Bitcoin mining operations continuing, Saylor’s company, Strategy, is reportedly acquiring BTC at a rate exceeding its mining output. This purchasing strategy has inadvertently contributed to Bitcoin’s deflationary characteristics.
As of now, Strategy possesses over 555,000 BTC, which translates into an estimated annual deflation rate of -2.23% for Bitcoin. This figure could escalate further when considering the impact of other institutional holders who apply the HODL strategy.
#Bitcoin is deflationary.@Strategy is buying BTC faster than it’s mined. Their 555K BTC is illiquid with no plans to sell. MSTR’s holdings alone mean a -2.23% annual deflation rate—likely higher with other stable institutional holders. pic.twitter.com/9VKT3IdcYo
— Ki Young Ju (@ki_young_ju) May 10, 2025
555,450 and Counting
The paradigm shift initiated by Saylor began in September 2020, during a phase when Bitcoin struggled to maintain a value above $10,000. At that time, MicroStrategy, under Saylor’s leadership, purchased 21,454 BTC through 78,388 off-chain transactions. As Bitcoin’s price reached a dizzying peak of nearly $70,000 the following year, the company continued to acquire, unfazed by the subsequent drops post-FTX crash.
Even as Bitcoin’s value fell below $20,000, Strategy reinforced its commitment and kept accumulating, demonstrating unwavering confidence in the cryptocurrency. Now, with an impressive collection of 555,450 BTC valued at almost $58 billion, the firm finds itself sitting on approximately $20 billion in unrealized profits.
In conclusion, while Bitcoin’s supply model may not initially appear deflationary, Michael Saylor’s acquisition tactics and strategic HODL approach contribute significantly to its emergent deflationary nature. As institutional interest continues to grow, we may witness further transformations in Bitcoin’s status as both a store of value and a deflationary asset.
