Bitcoin’s Sell-Side Liquidity: What You Need to Know
Recently, CryptoQuant founder and CEO Ki Young Ju shared insights on the Liquid Inventory Ratio for Bitcoin. This on-chain indicator reveals crucial information about the balance between the total sell-side liquidity inventory of Bitcoin and its demand in the market.
The sell-side liquidity inventory comprises four key factors:
- Total exchange reserves
- Miner holdings
- OTC desk holdings
- US government-seized BTC
Understanding Sell-Side Liquidity Inventory
The largest source of sell-side liquidity inventory is exchange reserves, which represent the funds held in centralized exchange wallets. Changes in the sell-side liquidity inventory of Bitcoin over the past few years can be seen in the chart below:
With the emergence of ETFs and increasing interest in long-term holding, Bitcoin liquidity on the sell side is decreasing, while demand continues to rise. This has led to a significant drop in the Liquid Inventory Ratio, indicating a shortage of supply compared to demand.
- The tightening of sell-side liquidity inventory
- The increasing demand for Bitcoin
Bitcoin Price Movement
After experiencing a minor pullback, Bitcoin has bounced back and is currently trading above $70,200. The resurgence in bullish momentum has propelled the price upwards:
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