Bitcoin: 72% of the total circulating BTC supply has become illiquid

As the Bitcoin market continues to fluctuate, one notable trend is emerging: the massive accumulation of BTC by whales and long-term investors. According to recent data from Glassnode, the illiquid supply of Bitcoin has reached an all-time high of 14.3 million BTC, accounting for more than 72% of the total circulating supply.

An increasingly illiquid supply of Bitcoin

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Bitcoin’s illiquid supply represents the coins held for the long term by investors who have little spending history. In other words, these are BTC that are not likely to be sold anytime soon. According to Glassnode, this illiquid supply has reached an all-time high of 14.3 million BTC. With a total circulating supply of around 19.92 million BTC, this means that more than 72% of all BTC mined is now considered illiquid.

This situation is exacerbated by the fact that whales (investors holding between 100 and 1,000 BTC) absorb nearly 300% of the annual supply of newly mined BTC, according to Glassnode’s teams. In plain English, these big investors are buying more BTC than is produced each year, further reducing the supply available in the market.

The reasons for this accumulation

The accumulation of BTC by whales and long-term investors is not new, but it has intensified recently. Several factors can explain this trend:

Long-term confidence: Investors seem to have increased confidence in Bitcoin’s long-term potential, viewing it as a store of value comparable to gold.
Inflation Protection: With inflation threatening global economies, Bitcoin is increasingly seen as a hedge against the devaluation of fiat currencies.
Institutional adoption: The growing interest of financial institutions in Bitcoin is boosting its legitimacy and attracting more investors.

What are the consequences for the market?

This massive accumulation of BTC by whales and long-term investors could have several repercussions on the market:

Rising prices: With an increasingly limited supply, the growing demand for Bitcoin could lead to higher prices, especially if adoption continues to accelerate.
Reduced volatility: If a large portion of the supply is held by long-term investors, this could reduce market volatility, as these investors are less likely to sell in response to short-term price fluctuations.
Centralization risk: However, the concentration of BTC in the hands of a few large investors could also pose centralization risks, where a handful of players would have disproportionate influence in the market.

As Bitcoin continues to grow in popularity, accumulation by whales and long-term investors could play a key role in the market’s future dynamics. With increasingly limited supply and potentially rising demand, Bitcoin could see further price increases in the coming months. Enough to call into question the notion of a cycle?