Bitcoin’s Supply Squeeze Intensifies as Network Upgrade Goes Live and Washington Deadline Looms

The world’s largest digital asset is navigating a rare confluence of events this week: a major protocol overhaul has gone live, a critical regulatory deadline is ticking in Washington, and corporate treasuries are hoarding supply at a pace not seen in years. The result is a market caught between structural bullish forces and lingering macro uncertainty.

Core 31.0 Rewires Transaction Processing

Bitcoin Core v31.0 represents the most significant architectural change to the network in recent memory. The headline feature is the new cluster mempool system, which replaces the old method of processing unconfirmed transactions individually. Instead, the network now bundles them into groups of up to 64 transactions. For everyday users, the practical impact is immediate: fee estimation becomes more accurate, and stuck transactions — particularly those involving batch payments — should become far less common.

Privacy has also received a meaningful upgrade. Nodes can now route transactions exclusively through Tor or I2P, meaning a sender’s IP address is no longer transmitted in plaintext. The default database cache has been doubled to 1,024 MiB, while the static -paytxfee setting has been removed entirely. Testing for the release began on April 11 in the testnet, and the code is now live on mainnet.

The Clock Runs Out on Capitol Hill

While developers upgrade the code, lawmakers are racing against a different kind of deadline. The US Senate must schedule a markup for the CLARITY Act by April 25 — otherwise, according to Senator Cynthia Lummis, the bill could be shelved until 2030 when the legislative calendar reopens after the midterm elections.

The bill already passed the House in July 2025 with a bipartisan 294-134 vote. Since then, it has stalled in the Senate amid disputes over stablecoin yield rules, regulatory jurisdiction, and developer liability. Senator Tillis recently indicated that hoped-for progress in April would likely slip into May.

At stake is nothing less than Bitcoin’s legal status. The CLARITY Act would permanently classify Bitcoin as a digital commodity under CFTC oversight. While the SEC and CFTC jointly issued an interpretive notice in March affirming that classification, such guidance can be reversed by any future administration. Only legislation can provide the kind of certainty that institutions demand.

Corporate Treasuries Go All In

The supply dynamics on the ground tell a story of aggressive accumulation. DDC Enterprise reported 2025 revenue of $39.2 million and its first positive adjusted EBITDA — and the company is channeling that operational strength directly into Bitcoin. As of April 21, DDC holds 2,383 BTC, worth roughly $182 million. That represents a doubling of its holdings since the end of 2025. The firm also unveiled a “DDC Treasury Intelligence Platform,” an AI-assisted tool designed to help corporate treasuries manage Bitcoin allocations. DDC has set a conservative target of 5,000 BTC by the end of 2026.

This is not an isolated phenomenon. The trend of diversifying corporate balance sheets with Bitcoin has moved well beyond MicroStrategy, now capturing a growing number of mid-market players.

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Exchange Reserves Hit Multi-Year Lows

The buying pressure is colliding with a rapidly shrinking pool of available supply. Bitcoin reserves on exchanges have fallen to 2.679 million BTC — the lowest level since December 2017. Investors are increasingly moving holdings to private wallets, draining liquidity from trading platforms.

Yet on-chain analysts caution that one classic bottoming signal has not yet appeared. The realized price of short-term holders has not crossed below that of long-term holders — a crossover that has historically marked a definitive trend reversal in previous cycles.

ETF Flows Remain a Bright Spot

Institutional demand through regulated products continues to provide a powerful tailwind. US spot Bitcoin ETFs have recorded net inflows for five consecutive trading days. BlackRock’s IBIT alone pulled in over $256 million in a single day, while Grayscale’s GBTC saw outflows of roughly $25 million. Cumulative net inflows into these products now stand at nearly $58 billion.

Regulatory Headwinds Elsewhere

Not all the news from the regulatory front is positive. New York Attorney General Letitia James has filed a lawsuit against Coinbase and Gemini, alleging the platforms operated prediction markets in the state without a license — and that they were accessible to users as young as 18, despite New York’s legal minimum age of 21 for such activities. James is seeking disgorgement of profits and penalties.

Whether this action triggers copycat lawsuits in other states remains to be seen. For now, the institutional accumulation story remains intact, but the legal landscape is growing more complex.

Price Action and Outlook

Bitcoin is currently trading near $78,000, up roughly 15% over the past 30 days and about 10% above its 50-day moving average. Large investors have quietly accumulated around 270,000 BTC over that period. Year-to-date, however, the asset is still down roughly 13%.

The next 72 hours will determine whether the CLARITY Act clears its Senate hurdle or faces another delay. Either way, the combination of a network upgrade, shrinking exchange supply, and steady institutional buying is creating a structural setup that few assets can match.