The Growing Scarcity of Bitcoin
Recent data from Glassnode reveals that the available supply of bitcoin is becoming increasingly constrained as long-term holders are holding onto their coins, resulting in historically tight circulation and impressive accumulation rates for the leading cryptocurrency.
Long-Term Holder Accumulation
According to Glassnode, around 68% of bitcoin’s circulating supply has remained untouched for over one year, while nearly 30% of the total supply has been held for more than five years. This trend indicates that veteran Bitcoin investors are bullish about future price increases, as they refuse to sell their holdings.
Rise in Illiquid Supply
The illiquid supply of bitcoin, which represents coins held in wallets with minimal spending activity, stands at a record 15.4 million BTC and is increasing by over 71,000 BTC monthly. This rise coincides with investors withdrawing digital assets from exchanges into custody solutions.
Exodus from Exchanges
Since May 2021, more than 1.7 million Bitcoin have left exchanges for self-hosted wallets, reflecting a preference for personally securing holdings. This exodus has contributed to historically scarce circulating bitcoin.
A Shift in Market Character
Glassnode suggests that the recent rally above $30,000 may mark a shift in market character, as short-term holder spending patterns changed after surpassing that key level. Many analysts view $30,000 as an inflection point where a broader bullish conviction could take hold.
Hot Take: Bitcoin’s Growing Scarcity and Implications
The unwillingness of long-term holders to part with their bitcoins is creating scarcity in the market. As demand for bitcoin continues to grow globally, the limited supply held by these investors is likely to drive prices even higher. The current trend suggests that significant price increases will be needed to entice long-term holders to sell their accumulated coins, pointing towards a potentially bullish future for bitcoin.
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