Bitcoin’s market dynamics are experiencing a significant shift as its “illiquid” supply reaches a record level. This, combined with a rapid decline in Bitcoin held on exchanges, signals a strengthening of investor demand and potentially sets the stage for a price surge.
Rising Illiquid Bitcoin Supply Reflects Long-Term Investor Confidence
Recent data from Glassnode reveals that Bitcoin’s illiquid supply has soared to 14.8 million BTC, or 75% of the total circulating supply. This surge represents Bitcoin held by long-term investors who are not actively selling, pointing to increasing confidence in the asset’s future. In just the past 30 days, over 185,000 BTC have joined this illiquid category, marking the second-highest increase this year.
This growing trend of Bitcoin being held rather than traded suggests that long-term holders (LTHs) are more focused on accumulating and holding their assets. Since late November, LTHs have added more than 2,000 BTC to their reserves, signaling a shift away from selling and profit-taking. As a result, the sell pressure in the market is likely diminishing, which could contribute to future price stability.
Bitcoin on Exchanges Hits a Multi-Year Low
In addition to the rise in illiquid Bitcoin, the amount of BTC on exchanges has plunged, now nearing a four-year low of less than 3 million BTC. This decrease indicates that more investors are taking their Bitcoin off exchanges, reflecting an inclination to hold the cryptocurrency rather than trade it. This shift suggests a growing conviction in Bitcoin’s long-term value and reduced selling activity from retail investors.
Looking at a broader five-year trend, Bitcoin on exchanges has fluctuated between 2.7 million to 3.3 million BTC. The current downtrend in exchange balances signals a more substantial interest in long-term holding, which is typically seen during periods of growing demand and positive sentiment.
Bitcoin’s $100,000 Sell Wall: A Barrier to Overcome
Bitcoin is currently facing a substantial $100,000 sell wall, with approximately $384 million worth of BTC available for sale between its current price and the six-figure milestone. This sizable obstacle is making it challenging for Bitcoin to surpass $100,000. However, the data surrounding Bitcoin’s illiquid supply suggests that the market may soon see increasing pressure toward an upward price movement as demand for the cryptocurrency remains strong.
The overall tightening of Bitcoin’s supply — with 75% now considered illiquid — continues to intensify its scarcity. This growing scarcity, coupled with the increasing demand from investors, could eventually result in a breakout above the $100,000 price level.
The Road Ahead: Bitcoin’s Supply Scarcity and Investor Sentiment
As 75% of Bitcoin’s supply remains off the market, it becomes increasingly clear that Bitcoin is entering a phase of scarcity, with fewer tokens available for trade. This limited supply, combined with consistent demand from long-term investors, suggests that Bitcoin is positioned for a potential price surge.
According to Andre Dragosch, Head of Research at Bitwise, “Bitcoin’s illiquid supply continues to hit new all-time highs, while exchange balances fall to multi-year lows. This further intensifies Bitcoin’s supply scarcity, a key factor in its potential for price appreciation.”
By emphasizing Bitcoin’s tightening supply and growing illiquid market, the outlook for future price growth becomes clearer. With more BTC being held off exchanges and in the hands of long-term investors, Bitcoin is seeing a more bullish environment — signaling that the upcoming months could see significant price action as supply continues to tighten.
