Bitcoin Faces Final Major Rotation as Institutions Drive Long-Term Supply Squeeze, Swan and Experts Warn of Volatility Risks

Bitcoin (BTC) is undergoing a major market transition, as highlighted by Swan Bitcoin and leading economists. The historic four-year boom-and-bust cycle may be ending, with coins now moving from short-term retail traders to institutional investors such as corporate treasuries, ETFs, and financial firms. While Bitcoin trades near all-time highs and consolidates around $105,000, realized volatility is at its two-year low. Swan notes that a significant supply squeeze is underway: long-term holders are realizing profits at elevated prices, while institutions—primarily long-only buyers—continue to absorb circulating coins and remove them from the market. This could result in shrinking liquidity and higher future prices if institutional demand remains strong. Three key transitions are underway: from early adopters to institutions, from speculation to long-term allocation, and generationally, as younger investors inherit wealth and opt for Bitcoin as a store of value. Some experts, however, caution that the market’s foundation remains unstable, with the risk of an 80% correction still possible, especially given the severe volatility seen in previous cycles. Macro factors such as rising bond yields and a weakening U.S. dollar may further boost Bitcoin’s appeal as a neutral store of value. Crypto traders should be cautious, as selling now may mean transferring coins to long-term institutional holders, reducing available supply. Overall, this shift could mark the end of an era and has significant implications for Bitcoin’s long-term market structure and price dynamics.