Bitcoin (BTC) investors are quick to stockpile most of the available currencies and are not for saleas new data showed in early 2021.
Statistics from the on-chain analytics resource Glassnode, originally released on December 29, 2020, confirm that nearly 80% of Bitcoin supply is illiquid.
78% of the BTC supply is not liquid
Changes in the composition of the Bitcoin market have become known. With new all-time highs above $ 35,000, it also shows that weak hands are selling their holdings to strong hands and institutions are buying from the whales.
This reshaping of the Bitcoin investor profile involves more long-term problems and less speculative activity, which in turn strengthens Bitcoin’s image as a worthwhile investment and continues the cycle of problems and price increases that result from a liquidity constraint.
This process has now been quantified for Glassnode. The numerical calculation by Rafael Schultze-Kraft, CTO of the company, estimates that 78% of the existing Bitcoin supply of 18.6 million BTC is unavailable.
“Right now, only 4.2 million BTC (22%) are in constant circulation and available to buy and sell,” he concluded.
“It’s worth seeing how this trend has developed in the past. If you look at the change in supply in each category since the beginning of the year, there is a clear upward trend in the illiquidity of Bitcoin. This suggests that the current bull market is being driven by volatile illiquidity. “
Willy Woo on the liquidity trend: “It’s bullish”
Glassnode is not the first to express the belief that investors are fighting over the firm supply of Bitcoin. Other commentators have previously concluded that a Bitcoin arms race is providing the fuel for one all-time high after another.
“Recent purchases have been made by long-term owners. This is bullish, this rally is far from over ”, one of them, the statistician Willy Woo, commented on the results of Glassnode.
“This is the change in the #Bitcoin offering among the participants. When more currencies move from liquid (active traders) to illiquid (HODLers) it is bullish. “
The economics of fixed supply and the decline in Bitcoin emissions are discussed in depth in “The Bitcoin Standard,” the popular book by Saifedean Ammous. Basically is As miners receive less and less “new” Bitcoin per block after each block subsidy halving event, Bitcoin’s inflation rate is falling. it is currently 1.8%.
Any proposal to change the dynamics of this status quo and thereby increase inflation would require full network consensus, and since this would ultimately make all participants poorer, no one has an incentive to do so. agree.
Since the Glassnode data was released, BTC / USD has already gained 35%.