Institutional Investors Absorb 25% of Bitcoin Supply as Whales Sell 500,000 BTC

Bitcoin is experiencing a significant shift in market control, with long-term whales selling off over 500,000 BTC valued at more than $50 billion over the past year. This sell-off has coincided with institutional investors absorbing nearly 900,000 BTC, now controlling approximately 25% of the entire circulating Bitcoin supply. This transition marks a fundamental change in the ownership dynamics of Bitcoin, as institutional players increasingly dominate the market.

Data compiled by 10x Research indicates that long-time Bitcoin holders, including miners and early adopters, have been steadily reducing their positions. This selling pressure has been largely balanced by the demand from institutional investors, such as exchange-traded funds, corporate treasuries, and asset managers. The institutional holdings now amount to around 4.8 million BTC, which is roughly 25% of Bitcoin’s circulating supply. These figures align with the total net inflows into U.S.-listed Bitcoin ETFs since their approval, suggesting a direct correlation between whale sell-offs and institutional acquisitions.

Edward Chin, co-founder of Parataxis Capital, noted that many whales are not simply selling on the open market but are converting their BTC into equity exposure. This trend indicates a strategic shift in how whales are managing their Bitcoin holdings, potentially driving increased network activity and market stability. The conversion of BTC into equity exposure through in-kind contributions into financing transactions tied to the public markets is a less covered driver of this churn and increasing network activity.

As this structural shift continues, Bitcoin’s market dynamics are also evolving. The Deribit’s BTC Volatility Index recently dropped to its lowest level in the past two years, signaling that institutional demand may be tempering Bitcoin’s traditional volatility. Rob Strebel, head of relationship management at DRW, commented that crypto is becoming less of an outlier and more established as a legitimate asset class. This shift is expected to result in a compression in volatility, altering Bitcoin’s investment appeal. Once known for aggressive price rallies, Bitcoin is increasingly being positioned as a long-term holding. Jeff Dorman, CIO at Arca, remarked that Bitcoin is probably more like a boring dividend stock over time, becoming an attractive retirement asset.

While institutional inflows have so far absorbed whale selling, the balance remains delicate. Historical patterns suggest the market remains vulnerable to disruption if inflows slow down while selling resumes. Outflows of just 2% in 2018 and 9% in 2022 triggered steep Bitcoin price declines of 74% and 64%, respectively. Hilary Allen, a law professor and long-time crypto skeptic, warned that the goal has always been to make Bitcoin a palatable asset for institutional investors to provide exit liquidity in volume so the whales could cash out. Despite this concern, some in the industry maintain a more resilient outlook. Fred Thiel, CEO of MARA Holdings Inc., explained that the market is nearing a point where it is hitting its peak, but the current market dynamic is very different. His company has yet to sell any of its Bitcoin holdings.

Markus Thielen, CEO of 10x Research, concluded that this transition can go on for a long time—years. It’s more of a slow grind, where Bitcoin becomes more of a 10%-20% asset. The nature of Bitcoin really changes. As Bitcoin continues to trade below its all-time high near $110,000, the quiet handoff from whales to institutions is redefining its market role. What once was a speculative asset now appears to be evolving into a measured, strategic allocation for traditional finance.