Lost, forgotten, or deceased—are Bitcoins even more "scarce" than we think?
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Bitcoin's supply cap is 21 million coins, but the amount actually available for circulation may be much lower than this.
Recently, according to data tracked by “Sound Money Report”, multiple on-chain analysis estimates suggest that between 2.3 million and 7.8 million bitcoins 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 roughly 19.9 million bitcoins currently in circulation, the effective number may be as low as 12.1 to 17.6 million coins.
In April 2010, Bitcoin's creator Satoshi Nakamoto once predicted on the BitcoinTalk forum: “Lost bitcoins only make everyone else's coins worth slightly more. Think of it as a donation to everyone.” Today, this comment from more than a decade ago is playing out on an unprecedented scale.
Irretrievable Digital Wealth
Unlike traditional assets such as stocks or bonds, there is no “loss report and replacement” in the bitcoin world. “Not your keys, not your coins,” a famous saying in the crypto world, often becomes the harsher reality of “No keys, no coins.”
Once the private key—that unique 256-bit password—is lost, the corresponding bitcoin becomes a “ghost asset” that is visible on the blockchain but forever inaccessible. Such cases are common, for example:
Reportedly, in 2013, Welsh IT engineer James Howells accidentally discarded a hard drive containing the private keys to 8,000 bitcoins; this asset is now worth nearly $900 million.Former Ripple CTO Stefan Thomas forgot the password to a hard drive containing 7,002 bitcoins, falling into endless despair with only two of his ten attempts remaining.There are also cases where enormous wealth is lost due to accidental death. Gerald Cotten, CEO of Canadian cryptocurrency exchange QuadrigaCX, reportedly died in 2018, resulting in $190 million in clients' funds (including a large amount of bitcoin) becoming inaccessible.
According to data compiled by Sound Money Report from multiple sources, the estimate for permanently lost bitcoins ranges from 2.3 million to 7.8 million coins.
Ledger, in a May 2025 report citing analysts' estimates, puts the lost amount at between 2.3 million and 3.7 million coins, about 11%-18% of the total.Cain Island Digital analyst Timothy Peterson estimated in a June 2025 report that over 6 million BTC are irretrievable.Blockchain analysis platform Glassnode and ARK Invest in a 2023 study estimated that around 7.8 million BTC are "hoarded or lost", though this may be overstated as it includes long-inactive "HODL" addresses, around 39% of total supply (as of September 8, 2025, about 19.9 million bitcoins had been mined).
Although there are differences in statistical methods, the data point to one fact: there is a vast and growing pool of permanently lost bitcoins.
Invisible “Supply Shock”: Underestimated Scarcity
This "invisible supply shock" created by lost bitcoins is far larger in scale than the much-discussed institutional adoption.
As of August 2025, all spot bitcoin ETFs collectively hold about 1.036 million bitcoins, and according to the Bitcoin Treasuries website, the top 100 listed companies globally hold about 988,000 bitcoins, with some other well-known companies also holding part of their assets in bitcoin. Combining ETF and corporate holdings totals about 2.2 million.
This means that even by the most conservative estimate of 2.3 million coins lost, the number of bitcoins permanently out of circulation already exceeds the combined holdings of Wall Street and corporate giants worldwide.
While the market stays focused on how much BlackRock's IBIT fund has in inflows, or how many bitcoins MicroStrategy has added, a much larger and more profound supply squeeze is quietly taking place.
Bitcoin's Real Market Cap May be Overestimated by $500 Billion
Using the current mined total of 19.9 million bitcoins as a base, subtracting a median estimate of 5 million lost coins and another 2.2 million held by institutions, and assuming about 3.8 million are “HODLed” long-term by individuals, the real amount of free-floating, tradeable bitcoin in the market is probably only around 8.9 million coins, about 45% of all that has been mined. By comparison, the free float ratio of S&P 500 components is usually 70%-90%.
Therefore, the more than $2.1 trillion bitcoin market cap reported in the media is actually an “illusion.” If you subtract 5 million “ghost bitcoins,” its real market value 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 coins. This “silent deflation” caused by loss, forgetfulness, and death is continuously reducing bitcoin's actual supply, with an impact and scale far beyond what mainstream financial media covers.
The market is gradually realizing that bitcoin is “scarcer than imagined.”
Risk Warning and DisclaimerThe market has risks, and investment should be made with caution. This article does not constitute personal investment advice, nor does it take into account individual users’ specific investment goals, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Investment based on this is at your own risk. ```