Bitmine Chairman announces that purchases will stop once ETH holdings reach 5% of total supply, hard cap approaching, less than 100,000 coins away from the target, ETH's most stable buyer about to exit, spot ETFs continue to see outflows, can the market absorb it?
Author: Zhou, ChainCatcher
On October 7, Tom Lee, chairman of Ethereum treasury company Bitmine, said at the Token2049 conference in Singapore that the company will stop buying once its ETH holdings reach 5% of total supply, and that 5% is a hard cap.
According to Bitmine's disclosures, as of October 4, the company held 6,016,414 ETH, about 4.9% of total supply. It is less than 100,000 ETH away from the cap, and based on the company's recent buying pace, it could fill the quota in about a month and a half.
This also means that ETH's most stable buyer over the past year or so is about to exit. At the same time, spot ETH ETFs have recently seen continued outflows, and ETH fell about 8.2% cumulatively from October 7 to 8. After Bitmine stops, can the market absorb the supply on its own?
Bitmine once absorbed 70% of newly added ETH
As is widely known, Bitmine launched its ETH treasury strategy on June 30, 2025, and has been buying every week since then. The company calls its goal of holding 5% of total ETH supply the 5% alchemy.
Tom Lee mentioned that the company initially thought it would take five years to achieve this goal, but it ended up taking only a little more than a year.
At the fastest pace of accumulation, Bitmine's weekly purchases once exceeded 100,000 ETH. Starting in May this year, the company deliberately slowed the pace, with weekly purchases falling to tens of thousands of ETH, and in recent weeks further declining to around 15,000 ETH. Even so, Bitmine has still accumulated more than 1 million ETH since 2026.
According to SoSoValue data, as of October 8, the total net asset value of U.S. spot ETH ETFs was about $15.64 billion, accounting for about 5.17% of ETH's market value. Bitmine alone accounts for about 4.9%, and its position size is already comparable to all U.S. spot ETH ETFs combined.
How important this buying pressure is to ETH needs to be viewed from the supply side of ETH.
After Ethereum shifted to proof of stake, newly issued ETH is distributed to stakers as rewards, and issuance increases as the total amount staked across the network rises. On the other side, the base fees paid by users are burned. After the Dencun upgrade in 2024, fees on Layer 2 networks fell sharply, and the burn amount shrank accordingly, leaving ETH in a state of net issuance ever since.
According to ultrasound.money data, over the past 7 days, ETH issuance was 20,876, while only 655 were burned, for an average daily net increase of about 2,980 ETH (about $7.22 million), equivalent to an annualized supply growth rate of about 0.86%.
According to Bitmine's announcement, the company bought 15,112 ETH on the market last week, about 72% of the newly issued supply over the same period. In other words, in recent times, about 70% of ETH's daily newly added supply has been absorbed by this one 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 had a sizable rebound in the third quarter, it weakened again after entering October, and its decline over the past year still exceeds 40%.
After the 5% hard cap, Bitmine may shift from buying to selling
The 5% threshold was not always Bitmine's hard cap. Previously, Tom Lee said in an interview that if Ethereum's applications continue to expand and more companies begin holding ETH, holding more than 5% would also be reasonable, and the company might reassess the issue in 2027.
Lee also mentioned that Bitmine's roughly $300 million in annual staking revenue is enough to cover the $30 million to $35 million in annual dividends on its 9.5% Series A preferred stock, and that the company has no reason to sell ETH due to funding needs.
Now Lee's stance has tightened, saying that 5% is a hard cap and that the company will not hold more than this proportion of ETH. In his view, with a hard cap, 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.
These remarks are related to Bitmine's situation over the past year. Once a treasury company's stock price falls below the value of the assets it holds, issuing more shares to buy coins dilutes the ETH corresponding to each share. Bitmine has repurchased 21 million shares this year, which Lee described in an announcement as the largest stock buyback ever by a crypto treasury company.
Some crypto KOLs believe the hard cap eliminates the hidden risk of equity dilution for BMNR, and Lee agrees. For the ETH market, this means the exit of a persistent buyer is now a foregone conclusion.
After it stops buying, Bitmine's holdings will not remain static. Tom Lee also mentioned that after reaching 5%, the company can sell the staking rewards it receives to maintain its share.
According to Bitmine's announcement, as of October 4, the company had staked 5,067,309 ETH, or 84% of its holdings, with a 7-day annualized yield of 2.63%, implying annualized staking revenue of about $363 million. Based on this, Bitmine can receive about 133,000 ETH in rewards each year.
ETH supply 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 breaching the cap. To keep its share at 5%, Bitmine may need to sell about 80,000 ETH in rewards each year.
However, in terms of scale, 80,000 ETH is worth about $200 million at current prices, less than $600,000 per day, so the direct market impact is limited. The real change is in direction: Bitmine may shift from a buyer absorbing 70% of newly added supply each week to a seller continuously releasing a small amount of ETH.
The principal is not up for sale. Lee previously said the company has no need to sell its core holdings, and the 5.07 million ETH already staked is still generating returns for the company.
A successor buyer has yet to emerge, and bullish-bearish divergence is widening
With Bitmine's exit imminent, the market naturally turns its attention to other buyers, but several major demand channels currently show no sign of taking over.
First, ETFs. According to SoSoValue data, along with ETH's rebound, spot ETH ETFs saw two consecutive months of net inflows in August and September, before turning to net outflows after entering October. Since September 29, ETFs have seen net outflows for 8 consecutive trading days, totaling about $641 million, including $579 million in net outflows since the start of October.
This was especially true around the days before and after Lee's remarks. On October 6, single-day net outflows were $202 million, almost entirely from BlackRock's ETHA, followed by outflows of $161 million and $72.54 million on October 7 and 8, respectively.
Exchange data points in a similar direction. According to Binance's proof of reserves, user ETH balances fell 4.61% in September, equivalent to about $499 million, while user BTC holdings increased by about $537 million over the same period.
Other ETH treasury companies are also unlikely to take over. When the stock price is below the value of the coins held, the model of issuing more shares to buy coins becomes difficult to sustain. Take SharpLink, the second-largest ETH treasury company, as an example. In June this year, when ETH was at a low, it bought only about 5,000 ETH, which was also its first increase in eight months.
Since then, SharpLink's holdings growth has mainly come from staking rewards. According to Lookonchain monitoring, as of the end of September, SharpLink held about 892,100 ETH and had received a cumulative 27,900 ETH in staking rewards.
However, earlier this month, Lee pointed out that Ethereum treasury companies currently hold a combined 7% of ETH supply, and that this proportion could rise to 15% in this cycle. By that calculation, after Bitmine stops, other institutions would still need to buy about 9.8 million ETH.
The staking side is somewhat better. As of October 6, about 1.5 million ETH was waiting to enter staking, while the exit queue was about 767,000 ETH, with the entry queue clearly larger than the exit queue. However, the exit queue had previously risen to 851,000 ETH due to the security incident disclosed by MetaMask on September 30. Lido said that this portion of ETH withdrawn as a precaution will gradually be restaked, so part of the entry queue is returning ETH, not all of it is new demand.Regarding ETH's prospects, Lee remains relatively optimistic. He stated that the crypto bull market began in August and could become the largest in history, driven by institution-led asset tokenization, generational wealth transfer, supply absorption by treasury companies, and on-chain payments by AI agents.
Crypto KOL Lanhu also said that Bitmine buying only 5% was the right move. After completing accumulation at low levels, Lee's next main task is to craft a narrative for ETH and promote Ethereum as the settlement layer for the on-chain Wall Street.
Many people believe that 5% is a cap set by the company itself, and Bitmine's halt in buying does not necessarily mean prices will fall. But after stopping, ETH has lost a stable large buyer, and prices will rely more on ETFs, staking demand, and other institutions, with volatility potentially amplified.
There is also a view based on concentration, arguing that stopping purchases is a commendable restraint. A single institution can become the largest participant, but it should not try to dominate Ethereum.