A Brewing Supply Shock in Bitcoin: 57% of BTC Dormant Since 2+ Years
Recent on-chain data reveals that a potential supply shock is building up in the Bitcoin market. Approximately 57% of all BTC has not been moved for at least two years, reaching consecutive new all-time highs (ATHs). These dormant coins belong to the long-term holder (LTH) group, referring to investors who have held their coins for at least 155 days.
Historically, LTHs are less likely to sell their coins as time goes on, making them the more steadfast side of the BTC market. The segment of LTHs with holdings of two or more years represents the most resolute HODLers. This group’s share of the total circulating Bitcoin supply has been steadily increasing since the FTX collapse, setting new ATHs.
The growth in this metric has slightly slowed down recently, but it continues to rise. Currently, these HODLers hold approximately 57% of the total Bitcoin supply, creating a significant supply squeeze for the cryptocurrency. Notably, similar trends have preceded previous bull runs.
The recent approval of Bitcoin spot ETFs by the US SEC could exacerbate this supply shock. Since the ETFs are approved for cash subscriptions only, each purchase further reduces Bitcoin available in the market.
Another Angle: Decreasing Exchange Supply
Bitcoin’s centralized exchanges are experiencing a decrease in their supply. The percentage of Bitcoin stored on these platforms has been declining over the past few days and now stands at just 12% of the total BTC supply. The exchange supply is more actively involved in buying and selling activities, so this decline indicates a decrease in the asset’s effective trading supply.
This reduction in available Bitcoin further contributes to the brewing supply shock in the market.
BTC Price
At the time of writing, Bitcoin is trading at around $45,900, reflecting a more than 4% increase over the past week.
Hot Take: A Potential Supply Crisis Looms for Bitcoin
The data on dormant BTC and decreasing exchange supply point to a potential supply crisis brewing in the Bitcoin market. With a significant portion of Bitcoin being held by long-term holders and less available for trading, the supply squeeze intensifies. This trend has historically preceded previous bull runs, indicating the potential for increased price volatility and upward momentum. Furthermore, the recent approval of Bitcoin spot ETFs could further exacerbate this situation by reducing available Bitcoin in the market. As demand continues to rise and available supply diminishes, the stage is set for a potential supply shock that could have significant implications for Bitcoin’s price and market dynamics.
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