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Author: Long Yue, Wall Street News
The supply cap of Bitcoin is 21 million, but the number that is truly available for circulation may be much lower than that.
Recently, according to the tracking of the data agency “Sound Money Report”, estimates from multiple on-chain analysis reports show that 2.3 million to 7.8 million Bitcoins may have been permanently withdrawn from circulation due to private key forgetting, hard disk damage or owner accidental death.This means that the current circulation supply of about 19.9 million pieces may be as low as 12.1 million pieces to 17.6 million pieces.
Bitcoin creator Satoshi Nakamoto predicted on the BitcoinTalk forum in April 2010: “Lost Bitcoin will only make other people’s coins more valuable. Think of it as a donation to everyone.” Now, this comment from more than a decade ago is evolving into reality on an unprecedented scale.
Irresistible digital wealth
Unlike traditional assets such as stocks or bonds, there is no “re-release report loss” in the world of Bitcoin.The famous saying of the crypto world “No keys, not your coins” (No keys, no coins) in reality often evolves into a more cruel “No keys, no coins”.
Once the private key – that unique 256-bit password – is lost, the corresponding Bitcoin will become a “ghost asset” visible but never touched on the blockchain.Such cases are common, such as:
Welsh IT engineer James Howells reportedly missed the hard drive with 8,000 bitcoin private keys in 2013, and the asset is now worth nearly $900 million.
Former Ripple Chief Technology Officer Stefan Thomas forgot the encrypted hard drive password containing 7,002 bitcoins, and fell into endless despair when he only had 2 left in 10 attempts.
There are also cases where huge wealth is taken away due to accidental death.Gerald Cotten, CEO of Canadian cryptocurrency exchange QuadrigaCX, allegedly died in 2018, leaving $190 million worth of customer funds, including a large amount of Bitcoin, unaccessible.
According to multiple data integrated by Sound Money Report, the estimated range of these permanently lost Bitcoins is between 2.3 million and 7.8 million.
Ledger cited analyst estimates in a May 2025 report that the number of lost items ranged from 2.3 million to 3.7 million, accounting for about 11%-18% of the total.
In a June 2025 report, Kane Island digital analyst Timothy Peterson estimated that more than 6 million BTCs are irreversible.
A 2023 study by blockchain analytics platforms Glassnode and ARK Invest estimated that about 7.8 million BTCs were in a “hoarded or lost” state, although the data may be high due to the long-term “hoarded” address, accounting for about 39% of the total supply (as of September 8, 2025, about 19.9 million Bitcoins have been mined).
Although there are differences in statistical caliber between the parties, these data together point to the fact that there is a large and growing pool of Bitcoins that lose permanently.
Invisible “supply shock”: underestimated scarcity
This “invisible supply shock” formed by the loss of Bitcoin is far larger than the market’s hotly discussed institutional adoption.
Data as of August 2025 show that all spot Bitcoin ETFs hold a total of about 1.036 million Bitcoins. According to statistics from the Bitcoin Treasuries website, the total number of Bitcoin holdings of the top 100 listed companies in the world is about 988,000, and some well-known companies hold some Bitcoins.Adding up ETFs and the Bitcoin held by enterprises is about 2.2 million.
This means that even at the most conservative 2.3 million lost counts, the number of Bitcoins that permanently exited circulation has exceeded the combined holdings of Wall Street and global corporate giants.
A larger and far-reaching supply tightening is quietly happening when the market focus is still on how much money has flowed in BlackRock’s IBIT funds, or how much Bitcoin has been increased by MicroStrategy.
Bitcoin’s real market value may be overvalued by about $500 billion
Taking the currently mined 19.9 million bitcoins as the base, subtracting a median estimated 5 million lost bitcoins, and subtracting the 2.2 million held by institutions, and assuming that individual long-term investors “hoarded” about 3.8 million, it was finally concluded that the free circulation of bitcoins that are truly available for trading in the market may be only 8.9 million, accounting for about 45% of the total amount mined.In contrast, the free circulation ratio of S&P 500 stocks is usually between 70% and 90%.
Therefore, the current media reports of the total Bitcoin market value of more than $2.1 trillion actually contains an “illusion”.If 5 million “Ghost Bitcoins” are excluded, their real market value should be about US$1.6 trillion, and about US$500 billion has evaporated out of thin air.
In short, Bitcoin’s scarcity is far beyond its 21 million pieces of paper setting.This “silent deflation” composed of loss, forgetting and death is constantly reducing the actual supply of Bitcoin, and its influence and scale are far beyond the current mainstream financial media’s attention.
The market is gradually realizing that this is “more scarce than imagined.”
