In a development that could have major implications for bitcoin’s price trajectory, new data reveals that the cryptocurrency’s “illiquid” supply has surged to an all-time high of 14.8 million BTC. This staggering figure represents approximately 75% of bitcoin’s total circulating supply of just under 20 million tokens.
Alongside this record-breaking milestone, the amount of bitcoin held on cryptocurrency exchanges has concurrently fallen to a near four-year low of slightly below 3 million tokens. According to analysts, these two data points in tandem suggest a significant rise in investor demand and a growing perception of bitcoin as a scarce asset.
Investors Are HODLing, Not Trading
The term “illiquid supply” refers to the amount of bitcoin that is held by long-term holders (LTHs) and is not actively traded on exchanges or markets. Over the past 30 days alone, Glassnode data indicates that illiquid supply has grown by more than 185,000 BTC – marking the second highest monthly increase this year.
This substantial shift towards illiquidity suggests that the predominant investor behavior at present is holding rather than trading. As one anonymous analyst noted:
The rapid rise in illiquid supply, coupled with the sharp decline in exchange balances, paints a clear picture. The smart money is accumulating bitcoin at an accelerating pace and moving it into cold storage. They see the long-term value proposition and are positioning accordingly.
Long-Term Holders Finish Profit-Taking
Further supporting the holding trend, recent CoinDesk analysis indicates that profit-taking sell pressure from long-term bitcoin holders may be nearing its conclusion. Since November 26th, the cohort of LTHs as a whole have shifted to accumulation mode, collectively adding over 2,000 BTC to their holdings.
This transition could signify that the period of LTHs realizing profits is ending, potentially alleviating significant sell-side pressure from the market. As profit-taking subsides and illiquid supply expands, the stage could be set for a supply squeeze and an upward move in price.
Exchange Balances Plummet Post-Halving
Coinciding with the surge in illiquid supply is a sharp contraction in the amount of bitcoin held on exchanges. Since the latest bull run commenced in early November, bitcoin has flowed out of exchange wallets at a remarkable rate.
This exodus has broken a nearly two-year trend of relative balance stability, ranging narrowly between 2.7 million to 3.3 million BTC. The decisive drawdown is an encouraging signal of authentic, enduring investor demand rather than derivatives-driven leverage and speculation. One industry executive highlighted the significance:
For bitcoin to embark on a sustainable uptrend, we need to see a convincing outflow from exchanges. Investors moving BTC into their own wallets is a strong vote of long-term confidence. It’s the fuel that ignites a true bull run, not temporary speculative frenzy.
– Head of Research, prominent digital asset manager
Intensifying Supply Scarcity
With a steadily rising illiquid supply and rapidly shrinking exchange balances, bitcoin’s supply scarcity is becoming more pronounced by the day. Nearly 75% of all minted bitcoins are now classified as illiquid, while less than 14% remain readily available on exchanges.
This evolving supply dynamic has not gone unnoticed by keen observers. Summing up the seismic shifts underway, one hedge fund manager revealed:
The amount of bitcoin that is truly accessible for new buyers is rapidly dwindling. We’re witnessing the liquid supply evaporate in real-time. It’s an undeniable bullish signal and a compelling fundamental case for significant price appreciation in the months ahead.
The Path Forward
As bitcoin journeys further into uncharted territory, all eyes are on the critical psychological and technical resistance at $100,000. The so-called “great wall” of sell orders at this key level is formidable, with $384 million in bitcoin waiting to be sold between the current price and the six-figure threshold.
However, when viewed through the lens of the recent illiquid supply and exchange balance data, the wind appears to be at bitcoin’s back. With an expanding army of committed long-term holders and a diminishing reservoir of readily tradeable coins, the stage may be set for a momentous showdown at the $100,000 frontier.
As one renowned on-chain analyst eloquently stated:
Bitcoin is a coiled spring right now. The supply-side pressure is building with every new illiquid coin added and each bitcoin withdrawn from an exchange. It’s a tug-of-war between bulls and bears at $100,000, but the fundamental data strongly favors the bulls. It’s only a matter of time before price reflects this mounting imbalance.
In the grand struggle between bitcoin’s irresistible bullish fundamentals and the immovable bearish resistance, something eventually has to give. With illiquid supply and investor resolve hardening by the day, the path of least resistance appears to be pointing firmly upwards. How the battle at $100,000 unfolds could define bitcoin’s trajectory for years to come.
