Written by: Long Yue, Wallstreetcn
The supply cap of bitcoin is 21 million, but the actual number available for circulation may be far lower than this.
Recently, according to tracking by data agency "Sound Money Report" and estimates from multiple on-chain analysis reports, between 2.3 million and 7.8 million bitcoin may have permanently exited circulation due to reasons such as forgotten private keys, hard drive damage, or accidental death of owners. This means that out of the current circulating supply of about 19.9 million, the effective number may be as low as 12.1 to 17.6 million.
In April 2010, bitcoin creator Satoshi Nakamoto predicted on the BitcoinTalk forum: "Lost coins only make everyone else's coins worth slightly more. Think of it as a donation to everyone." Now, this comment from over a decade ago is becoming reality on an unprecedented scale.
Irretrievable Digital Wealth
Unlike traditional assets such as stocks or bonds, there is no "loss report and reissue" in the world of bitcoin. The famous saying in the crypto world, "Not your keys, not your coins," often turns into the harsher reality of "No keys, no coins."
Once the private key—a unique 256-bit password—is lost, the corresponding bitcoin becomes a "ghost asset" visible on the blockchain but forever inaccessible. Such cases are not uncommon, for example:
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Reportedly, Welsh IT engineer James Howells accidentally discarded a hard drive containing the private key to 8,000 bitcoin in 2013, an asset now worth nearly $900 million.
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Former Ripple CTO Stefan Thomas forgot the password to an encrypted hard drive containing 7,002 bitcoin, falling into endless despair with only two attempts left out of ten.
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There are also cases where sudden death has taken away vast fortunes. Gerald Cotten, CEO of Canadian cryptocurrency exchange QuadrigaCX, reportedly died in 2018, resulting in $190 million of client funds (including a large amount of bitcoin) becoming inaccessible to anyone.
According to data consolidated by Sound Money Report from multiple sources, the estimated range of permanently lost bitcoin is between 2.3 million and 7.8 million.
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Ledger, in a May 2025 report citing analysts' estimates, stated that the number of lost coins is between 2.3 million and 3.7 million, accounting for about 11%-18% of the total supply.
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Cayman Islands digital analyst Timothy Peterson estimated in a June 2025 report that over 6 million BTC are irretrievable.
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Blockchain analytics platform Glassnode and ARK Invest, in a 2023 study, estimated that about 7.8 million BTC are "hoarded or lost," though this figure may be inflated due to the inclusion of long-dormant "hoarding" addresses, accounting for about 39% of total supply (as of September 8, 2025, about 19.9 million bitcoin have been mined).
Although there are differences in statistical approaches, these data all point to one fact: there exists a large and ever-growing pool of permanently lost bitcoin.
Invisible "Supply Shock": Underestimated Scarcity
This "invisible supply shock" caused by lost bitcoin is much larger in scale than the much-discussed institutional adoption.
As of August 2025, all spot bitcoin ETFs collectively hold about 1.036 million bitcoin. According to Bitcoin Treasuries, the total holdings of the top 100 publicly listed companies worldwide amount to about 988,000 bitcoin, with some well-known companies holding additional bitcoin. Adding together the bitcoin held by ETFs and corporations, the total is about 2.2 million.
This means that even with the most conservative estimate of 2.3 million lost coins, the number of bitcoin permanently out of circulation already exceeds the combined holdings of Wall Street and global corporate giants.
While the market's focus remains on how much capital BlackRock's IBIT fund has attracted or how much more bitcoin MicroStrategy has acquired, a much larger and more far-reaching supply squeeze is quietly unfolding.
The True Market Cap of Bitcoin May Be Overestimated by About $500 Billion
Based on the current 19.9 million mined bitcoin, subtracting a median estimate of 5 million lost coins, then subtracting 2.2 million held by institutions, and assuming long-term individual investors are "hoarding" about 3.8 million, the actual freely circulating bitcoin available for trading in the market may be only 8.9 million, about 45% of the total mined. In contrast, the free float ratio of S&P 500 constituent stocks is usually between 70%-90%.
Therefore, the current media-reported bitcoin total market cap of over $2.1 trillion actually contains an "illusion." If 5 million "ghost bitcoin" are excluded, its real market cap should be about $1.6 trillion, with about $500 billion evaporating out of thin air.
In summary, bitcoin's scarcity far exceeds its nominal cap of 21 million. This "silent deflation" caused by loss, forgetfulness, and death is continuously reducing the actual supply of bitcoin, with an impact and scale far beyond the attention of mainstream financial media.
The market is gradually realizing that it is "scarcer than imagined."