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Bitcoin liquid supply hits all-time low as long-term holders accumulate

Published Nov 09, 2023 07:36
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Bitcoin’s liquid supply reached an all-time low on November 8, 2023, according to data from Glassnode. The decrease in freely circulating Bitcoin is attributed to long-term investors amassing record amounts, with over 15.4 million tokens held in wallets showing minimal spending patterns. This illiquid supply, denoting bitcoins in wallets with minimal spending history, hit a record high, increasing by over 71,000 monthly.

Today's release underscored that the current price levels are pivotal, as most short-term held coins turned profitable after Bitcoin breached the $30,000 threshold. This has influenced spending behavior among short-term holders and could trigger a coin transfer to new investors, especially if the price descends from the current $35,272 level.

The tightening market is reflected in the rising disparity between long-term holders (LTH) and short-term holders (STH). About 68% of Bitcoin has been dormant for over a year, and nearly 30% for more than five years. A stark divergence is forming between the supplies of LTH and STH, with the latter being at an all-time low. LTHs typically distribute their holdings when the market achieves new highs. Notably, the 2021 bull run led to a significant decrease in LTH supply, counterbalanced by an uptick in STH supply and exchange inflow volumes.

Investor optimism is being fueled by expectations of Bitcoin breaking previous price records, spurred by potential spot Bitcoin ETF approval and the impending April 2024 halving event. This selling resistance is driving the market, with Bernstein's bullish forecast of Bitcoin hitting $150,000 by mid-2025 adding to the positive market sentiment.

Earlier today, Glassnode reported that as the Bitcoin halving event in April 2024 approaches and spot Bitcoin ETF approvals become increasingly likely, self-custodial wallet supply has increased. Investors have moved more than 1.7 million bitcoins from exchanges into custody since May 2021. Bitcoin held for over a year and hit record highs across age bands. Following last year's FTX collapse and consequent 2021 bull market lows, the illiquid supply has grown steadily with coins moving into illiquid wallets.

The Hodler Net Position Change indicator confirmed this trend of accumulation by LTHs. Smaller cohorts have also been aggressively accumulating since late October, resulting in a divergence between LTH and STH supplies. The recent price rally led to significant profit-taking by short-term holders as indicated by the Sell-Side Risk Ratio indicator.

Bitcoin's price has once again surpassed $35,000, signaling market optimism as reflected in Bitcoin’s Fear and Greed Index. Bitcoin's value increased by 1.3% within 24 hours to $35,272, affirming its status as the world's largest cryptocurrency by market capitalization. The data also revealed impressive rates of coins HODLed and a multi-year period of net gains in illiquid supply.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Bitcoin liquid supply hits all-time low as long-term holders accumulate
 

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