You think you know Bitcoin? Think again. We are all playing the game with the assumption that Bitcoin’s scarcity is a fact, a base rule of the game embedded in its code. What if that truth isn’t quite true, or at the very least, tells a story that is misleading? Just a week ago, CryptoQuant’s Carmelo Alemán blew it all up. He showed us that the true circulating supply of Bitcoin could be far less than we think.

Less Bitcoin Than We Thought?

Isn’t that recovery of Bitcoin above $93,000 just wonderful? A 5% increase in a single day is eye-popping. When it comes, a 20% jump in two weeks will really get your attention. Here's where it gets interesting. Naturally, we’ve long considered Bitcoin’s halving events to be the mechanisms through which it enforces its much discussed fixed supply limit. The math is simple: a block every 10 minutes, reward halves, predictable issuance. But Alemán’s analysis indicates that the actual world mining dynamics are straying from this theoretical paradigm, particularly after the halving.

With the conclusion of the most recent halving, the block reward was reduced to 3.125 BTC. Sounds straightforward, right? That would imply an increase of around 450 new BTC entering circulation each day (3.125 BTC * 144 blocks). It's not happening. On-chain data paints a different picture: a lower actual emission. Where's the missing Bitcoin?

Refined Models, Rethinking Valuations

This isn't just an academic curiosity. That’s a very big deal for how we value Bitcoin. This difference illustrates a major danger in focusing only on theoretical projections. It means we’ve all been constructing our market models on potentially misleading data. Liang Hua, with her engineering sensibilities, would most likely argue that what this requires is a total recalibration.

Think about it. Traditional financial models rely on accurate supply data. If the supply of a stock is significantly underreported, wouldn’t that have a huge impact on how valuable it seems to be? Of course! Bitcoin shouldn’t be any different. If there really is less Bitcoin available than we were led to believe, then the current models are indeed low-balling its true potential.

Here’s where the surprising link comes in. Remember the housing market crash of 2008? A huge piece of that puzzle was that risky financial derivatives were created off of rotten underlying information. Are we about to repeat the same mistake with Bitcoin by overlooking the subtleties of on-chain activity?

Unintended Consequences: Scarcity Amplified

The implications are profound. As a result, the true supply of Bitcoin in circulation could be much smaller. This new increase in scarcity makes its value proposition even stronger than what we originally foreshadowed. No, I’m not forecasting Bitcoin to reach $200,000 overnight. This could be the revelation that really pours some awesome gas on that fire!

This isn’t merely an exercise in playing with numbers on a spreadsheet —far from it— it’s about completely reshaping the narrative of what Bitcoin is. It’s just about appreciating the fact that the blockchain really narrates a story that these theoretical models are simply unable to capture. Carmelo Alemán's work at CryptoQuant is more than just data analysis. It's a call to action.

  • Inflation Hedge: One of Bitcoin's core appeals is as a hedge against inflation. A lower supply strengthens this argument.
  • Institutional Adoption: Institutional investors are increasingly drawn to Bitcoin's scarcity. This news will only accelerate that trend.
  • Long-Term Valuation: A more accurate understanding of supply dynamics will lead to more realistic and potentially higher long-term valuation models.

You need to pay attention to on-chain metrics. So don’t assume the numbers you read in the mainstream media are accurate or trustworthy. Dive deeper. Explore the blockchain. Understand the real-time dynamics of Bitcoin supply. It will give you an edge.

The future of Bitcoin is not just about the next technological innovation, but making smart decisions. Use on-chain data to redefine what’s popular and question the status quo. This robust strategy will ensure you take full advantage of the hidden scarcity discovered by CryptoQuant. Don’t do what everybody else is doing – be the trendsetter.

Past performance is not indicative of future results. Cryptocurrency trading is risky. As always, do your own research and talk to your own financial advisor before making any investment.

*Disclaimer: Past performance is not indicative of future results. Cryptocurrency trading is risky. Do your own research and consult with a financial advisor before making any investment decisions.