Major Buyer Exiting Soon: Who Will Absorb the Potential Selling Pressure of Over $7 Million in ETH Daily?

Author: Zhou, ChainCatcher

On October 7, Tom Lee, chairman of Bitmine, an Ethereum treasury company, stated at the Token2049 conference in Singapore that the company would stop buying ETH once its holdings reached 5% of the total supply, which is a hard cap.

According to Bitmine, as of October 4, the company held 6,016,414 ETH, accounting for approximately 4.9% of the total supply. It is less than 100,000 ETH away from the cap, and at the company's recent buying pace, it could reach the limit in about a month and a half.

This also means that the most stable buyer of ETH over the past year is about to exit. Meanwhile, ETH spot ETFs have been experiencing continuous outflows, with ETH dropping approximately 8.2% from October 7 to 8. After Bitmine stops buying, will the market be able to absorb the supply?

Bitmine Once Absorbed 70% of New ETH

It is well known that Bitmine launched its ETH treasury strategy on June 30, 2025, and has been buying weekly since then. The company refers to its goal of holding 5% of the total ETH supply as the "5% Alchemy."

Tom Lee mentioned that the company initially thought it would take five years to achieve this goal, but it only took a little over a year.

At its fastest, Bitmine's weekly purchases exceeded 100,000 ETH. Since May of this year, the company has actively slowed down its pace, reducing weekly purchases to tens of thousands, and in recent weeks further down to around 15,000. Even so, Bitmine has accumulated over 1 million ETH since 2026.

According to SoSoValue data, as of October 8, the total net asset value of U.S. ETH spot ETFs was approximately $15.64 billion, accounting for about 5.17% of ETH's market cap. Bitmine alone accounts for about 4.9%, with a holding size comparable to all U.S. ETH spot ETFs.

The importance of this buying pressure for ETH needs to be viewed from the supply side.

After Ethereum transitioned to proof of stake, new ETH is issued as rewards to stakers, and the issuance increases with the overall staking scale. On the other hand, the base fees paid by users are burned. After the Dencun upgrade in 2024, fees on layer two networks significantly decreased, leading to a reduction in the burn rate, and ETH returned to a net issuance state.

According to ultrasound.money data, in the past 7 days, 20,876 ETH were newly issued, while only 655 were burned, resulting in an average daily increase of about 2,980 ETH (approximately $7.22 million), with an annual supply growth rate of about 0.86%.

According to Bitmine's announcement, the company bought 15,112 ETH in the market last week, accounting for about 72% of the newly issued amount during the same period. This means that about 70% of the newly supplied ETH in recent times has been absorbed by this company.

However, this buying pressure has not supported the price. After ETH peaked in October 2025, the crypto market entered a bear market. Although ETH saw a significant rebound in the third quarter, it weakened again in October, with a decline of over 40% in the past year.

After the 5% Hard Cap, Bitmine May Shift from Buying to Selling

The 5% cap was not always Bitmine's hard limit. Previously, Tom Lee stated in an interview that if Ethereum's applications continue to expand and more companies start holding ETH, holding more than 5% could be reasonable, and the company might reassess this issue in 2027.

Lee also mentioned that Bitmine's annual staking income of about $300 million is sufficient to cover the dividends of $30 million to $35 million per year for 9.5% Series A preferred stock, so the company has no reason to sell ETH due to funding needs.

Now, Lee's stance has tightened, stating that 5% is a hard cap, and the company will not hold more than this proportion of ETH. In his view, with a hard cap in place, shareholders do not need to worry about the company continuing to raise funds to buy coins, and BMNR has a better chance of outperforming ETH in a rising market.

This statement is related to Bitmine's situation over the past year. If the treasury company's stock price falls below the value of its assets, issuing more shares to buy coins will dilute the corresponding ETH per share. Bitmine has already repurchased 21 million shares this year, and Lee stated in the announcement that this is the largest stock buyback in the history of crypto treasury companies.

Some crypto KOLs believe that the hard cap eliminates the risk of equity dilution for BMNR, and Lee agrees with this. For the ETH market, this means that the exit of a consistent buyer has become a certainty.

After stopping purchases, Bitmine's holdings will not remain static. Tom Lee also mentioned that after reaching 5%, the company can sell the staking rewards received to maintain its proportion.

According to Bitmine's announcement, as of October 4, the company had staked 5,067,309 ETH, accounting for 84% of its holdings, with a 7-day annualized yield of 2.63%, and an estimated annual staking income of about $363 million. Based on this calculation, Bitmine can earn approximately 133,000 ETH in rewards each year.

The supply of ETH itself is also growing, with a net increase of about 1.05 million ETH per year, of which 5% is about 53,000 ETH, which Bitmine can retain without exceeding the cap. To maintain its proportion at 5%, Bitmine may need to sell about 80,000 ETH in rewards each year.

However, from a scale perspective, 80,000 ETH at the current price is approximately $200 million, averaging less than $600,000 daily, which has limited direct impact on the market. The real change lies in the direction, as Bitmine may shift from being a buyer that absorbs 70% of the new supply weekly to a seller that continuously releases a small amount of ETH.

The principal is not included in the sale. Lee previously stated that the company has no need to sell its core holdings, and the 5.07 million ETH that has been staked continues to generate income for the company.

No New Buyers Yet, Divergence Between Bulls and Bears Expands

With Bitmine's exit imminent, the market naturally turns its attention to other buyers, but several major demand channels currently show no signs of stepping in.

First is the ETF. According to SoSoValue data, alongside the rebound of ETH, ETH spot ETFs saw net inflows for two consecutive months in August and September, but turned to net outflows in October. Since September 29, ETFs have seen net outflows for eight consecutive trading days, totaling approximately $641 million, with net outflows of $579 million since October.

Especially in the days surrounding Lee's statements. On October 6, the single-day net outflow was $202 million, almost entirely from BlackRock's ETHA, with further outflows of $161 million and $72.54 million on October 7 and 8, respectively.

Data from exchanges points in a similar direction. According to Binance's proof of reserves, user ETH balances decreased by 4.61% in September, approximately $499 million, while user BTC holdings increased by about $537 million during the same period.

Other ETH treasury companies also find it difficult to step in. When stock prices fall below the value of their holdings, the model of issuing more shares to buy coins becomes unsustainable. For example, the second-largest ETH treasury company, SharpLink, only bought about 5,000 ETH when ETH was at a low in June this year, marking its first increase in eight months.

Subsequently, SharpLink's holding growth mainly came from staking rewards. According to Lookonchain monitoring, as of the end of September, SharpLink held approximately 892,100 ETH and had accumulated staking rewards of 27,900 ETH.

However, at the beginning of this month, Lee pointed out that Ethereum treasury companies currently hold 7% of the ETH supply, and this proportion could rise to 15% during this cycle. Based on this calculation, after Bitmine stops, other institutions will still need to buy about 9.8 million ETH.

The situation on the staking side is slightly better. As of October 6, approximately 1.5 million ETH were waiting to enter staking, while about 767,000 ETH were in the exit queue, with the entry queue clearly exceeding the exit queue. However, the exit queue had previously surged to 851,000 ETH due to a security incident disclosed by MetaMask on September 30. Lido stated that this portion of preventive exits will gradually be re-staked, so some of the ETH in the entry queue is returning ETH, not all of it is new demand.

Regarding the outlook for ETH, Lee remains optimistic. He stated that the crypto bull market began in August and could become the largest one in history, driven by institutional-led asset tokenization, intergenerational wealth transfer, treasury companies absorbing supply, and on-chain payments by AI agents.

Crypto KOL Blue Fox also stated that it was right for Bitmine to only buy 5% and that after completing accumulation at a low level, Lee's next main task is to narrate for ETH and promote Ethereum as the settlement layer for on-chain Wall Street.

Many believe that the 5% is a self-imposed limit by the company, and Bitmine stopping purchases does not necessarily mean prices will fall. However, after stopping, ETH will lack a stable large buyer, and prices will become more reliant on ETFs, staking demand, and other institutions, potentially amplifying volatility.

There are also views that, from a concentration perspective, stopping purchases is a commendable restraint. A single institution can become the largest participant but should not attempt to dominate Ethereum.

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