Bitcoin (BTC) investors are storing most quickly available currencies, which are not for sale, as new data shows in early 2021.
Glassnode’s analytical stats about the chain, originally published on December 29, 2020, confirm that nearly 80% of Bitcoin’s supply is non-liquid.
78% of Bitcoin supply is illiquid
Changes in the configuration of the Bitcoin market are well known. When new full-time peaks appear above $ 35,000, there is also a story of weak hands selling their assets to strongmen and institutions buying from whales.
The restructuring of this bitcoin investor profile includes long-term holding and less speculative activity, which in itself reinforces Bitcoin’s image as a valuable investment and continues the cycle and increases in prices due to lack of liquidity.
For Glassnode, this process was measured. Raphael Scholes-Kraft, Chief Technology Officer, estimates that 78% of Bitcoin’s current supply of 18.6 million bitcoins is unavailable.
It concluded, “Only 4.2 million Bitcoins (22%) are in circulation and are available for purchase and sale.”
It is worth seeing how this trend has evolved in the past. By looking at the change in supply in each category since the start of the year, we can see a clear upward trend in Bitcoin’s illiquidity. This indicates that the beef market today is being driven by an impressive level of liquidity. ”
Diagram of the changes in floating Bitcoin display. Source: Willie Wu / Glassnode
Willie Wu talks about liquidity trend: “It’s bullish”
Glassnode is not the first to express his belief that investors are struggling with a steady supply of bitcoin. Other commentators have previously concluded that Bitcoin’s arms race provides the fuel for one record in a row.
“The recent purchases have been made by long-term shareholder members. That’s optimistic, this rally is still a long way off,” one of them, statistician Willie Wu, commented on Glassnode’s findings.
“This is a change in the delivery of #bitcoin among participants. As more and more coins move from floating (active traders) to non-liquid trading (HODLers), this is optimistic.”
The economics of steady Bitcoin supply and emissions cuts are described in the popular Cyfedine Ammu book, The Bitcoin Standard. It is important to note that because miners receive fewer and fewer “new” bitcoins per block after each halving of block support, bitcoin inflation is currently down 1.8%.
Any proposal to change the status quo dynamics and thus increase inflation would require a complete consensus on the grid, and since this would ultimately make everyone poorer, there is no incentive for anyone to agree.
Meanwhile, since the publication of the Glassnode data, the Bitcoin / USD exchange rate has already appreciated by 35%.