Bitcoin’s Limited Supply Meets Surging Institutional Appetite: The Path to a $1 Million Valuation

Bitcoin is currently moving sideways after rebounding from the $107,000 support. Although bullish signals are starting to appear, the direction of the next major move will hinge on whether the price can surpass critical liquidity levels or experience another retracement for accumulation. Experts point to a well-defined trading channel, with $107,000 acting as support and $123,000 as resistance on the daily timeframe. The recent bounce from the lower end of this range has lifted the price above the 100-day moving average, reflecting renewed buying pressure.

Examining the 4-hour timeframe,

is now nearing the local peak at $117,000. A brief correction toward the $110,700–$113,100 demand zone remains possible. Historically, this area has attracted significant buying, and a solid retest could add confidence to the bullish scenario. Should buyers maintain control in this zone and regain momentum, the liquidity above the recent high could draw prices higher, potentially fueling a continued rally.

On-chain data reveals a concentration of liquidations just above the recent peak, matching the liquidity patterns seen on the 4-hour chart. Price action can accelerate as the market approaches these levels because stop-losses and forced liquidations can quickly increase volatility. A decisive break above the swing high might trigger a wave of short covering, propelling prices upward.

Bitcoin has been moving within a set range, with large-scale institutional and government adoption playing a pivotal role in shaping market trends. The capped supply of 21 million Bitcoin stands in contrast to the shifting demand curve, which is being reshaped by institutional accumulation and strategic holdings. Following the fourth halving in April 2024, the available liquid supply dropped to about 11.1875 million coins. Corporations and institutions like MicroStrategy continue to absorb Bitcoin, further reducing the available supply and supporting price growth.

The balance between limited supply and increasing demand is crucial in determining Bitcoin’s price path. Recent research models indicate that if the trend of moving coins from liquid supply to strategic reserves persists, Bitcoin’s price could see substantial gains. For instance, removing 2,000 coins daily from the liquid pool could result in a projected price of $1,093,690 by April 2036. Even greater rates of withdrawal could cause prices to skyrocket due to scarcity.

Parameters such as the demand shift multiplier and elasticity also significantly influence Bitcoin price projections. With a tenfold boost in the demand shift parameter, Bitcoin could rise to $648,890—even without further reductions in liquid supply. This demonstrates that increased institutional participation alone could have a major price impact, regardless of supply-side factors.

Institutional interest is growing even faster thanks to strategic reserve strategies and new financial instruments. For example, some companies are issuing low-interest convertible bonds specifically to acquire Bitcoin, illustrating how credit-driven demand can further constrain available supply. By mid-December 2024, Bitcoin traded at around $102,000, highlighting notable demand growth compared to earlier in the year.

Current market signals point to a surge in institutional involvement through 2025 and beyond. Developments like MicroStrategy joining the Nasdaq 100, updates to FASB accounting guidelines, and rising international interest in strategic reserves are all contributing to a more aggressive bull market outlook. Under certain withdrawal and demand scenarios, Bitcoin could potentially reach $1 million by early 2027.

Bitcoin’s price is highly responsive to changes in liquid supply, a defining feature of its market behavior. When coins are purchased for long-term reserves, the available supply drops and prices rise; conversely, when new coins are released or long-held coins are sold, the circulating supply grows and prices may fall.

Looking forward, Bitcoin’s perfectly inelastic supply means the rate at which coins are moved from liquid supply to long-term holdings will have a profound effect on both price growth and volatility. While these forecasts are preliminary, they offer important insights for investors—especially institutions and governments—looking to plan future portfolio allocations.