Why Dan Tapiero expects a massive Bitcoin shortage

In recent months, there has been a considerable spike in institutional demand for Bitcoin following several high profile investments.

Over time, asset manager and 10T Holdings co-founder Dan Tapiero believes this could lead to a problematic shortage in BTC. Alongside investments from Square, MicroStrategy and Stone Ridge, Bitcoin inflows to Grayscale Bitcoin Trust have surged.

In the third quarter of 2020, the Grayscale Bitcoin Trust recorded an inflow of $1.05 billion.

Cumulative quarterly inflows into Grayscale trusts, including Bitcoin.

On March 13, Bitcoin fell $3,600 after a $1 billion worth of futures contracts were liquidated.

Institutional demand for Bitcoin surged rapidly after what is now referred to as one of Bitcoin's steepest falls in recent history and this indicates institutions see staying power.

"SHORTAGES of Bitcoin possible. Barry's Grayscale Trust is eating up BTC like there is no tomorrow. If 77% of all newly mined turns into 110%, it's lights out. Non-miner supply will get held off market in squeeze. Shorts will be dead. Price can go to any number."

The speculation about a potential supply-side crisis around Bitcoin also coincides with the post-halving cycle.

Bitcoin went through its third halving on May 11 and historically, halvings lead to extended bull runs in the next two years.

Bitcoin has a fixed supply of 21 million and as with each halving the amount of BTC miners can produce decreases.