Bitcoin’s market dynamics are showing signs of positive change, with its illiquid supply reaching an all-time high. This, alongside a significant drop in the amount of Bitcoin held on exchanges, is indicating a shift in investor behavior and suggesting increasing demand for the cryptocurrency.
Bitcoin’s Illiquid Supply Surges, Reflecting Long-Term Investor Confidence
Recent Glassnode data reveals that the illiquid supply of Bitcoin has now reached a record 14.8 million BTC, accounting for 75% of the total circulating supply. This surge highlights the growing trend of long-term holders who are not actively selling their Bitcoin, signaling stronger confidence in its future value. Over the past month alone, Bitcoin’s illiquid supply grew by over 185,000 BTC, marking one of the largest increases in 2023.
This rise in illiquid supply suggests that investors are holding onto their Bitcoin in anticipation of future price increases. Since late November, long-term holders (LTHs) have been accumulating more BTC, further reducing the market’s sell pressure. As a result, Bitcoin’s market may experience less selling and increased upward momentum in the coming months.
Bitcoin on Exchanges Hits Multi-Year Low, Indicating Growing Demand
In addition to the surge in illiquid supply, Bitcoin’s presence on exchanges has significantly dropped. The amount of Bitcoin held on exchanges has fallen to just under 3 million BTC, a level not seen in nearly four years. This drop indicates that more investors are removing their Bitcoin from exchanges, further supporting the idea of long-term holding and rising demand for the cryptocurrency.
Looking at a five-year trend, Bitcoin on exchanges has been relatively stable between 2.7 million and 3.3 million BTC. The current decline in exchange balances suggests a shift toward holding rather than trading, a positive indicator of investor sentiment.
The $100,000 Sell Wall: A Key Barrier for Bitcoin
Bitcoin is currently facing a major $100,000 sell wall, with roughly $384 million in Bitcoin available for sale between its current price and the six-figure threshold. This large sell wall presents a challenge for Bitcoin’s price to break through the $100,000 level. However, with the rising illiquid supply and strong demand, Bitcoin is seeing a buildup of pressure that could eventually push it past this barrier.
The fact that 75% of Bitcoin’s total supply is now considered illiquid continues to tighten the available supply, which could lead to significant upward price movement as demand intensifies.
Bitcoin’s Supply Scarcity: A Key Factor for Future Price Growth
As the number of Bitcoin held off exchanges continues to grow, the cryptocurrency’s supply is becoming more scarce. This supply scarcity, combined with strong demand from long-term holders, creates an environment where price appreciation is more likely.
According to Andre Dragosch, Head of Research at Bitwise, “With nearly 75% of Bitcoin’s supply illiquid and less than 14% remaining on exchanges, Bitcoin’s scarcity continues to build, which could lead to higher prices.”
Looking Forward: Bitcoin’s Potential for Growth
Bitcoin is entering a phase where its limited supply and growing demand could drive significant price appreciation. As long-term holders continue to accumulate and exchanges see reduced balances, Bitcoin’s market is becoming increasingly resilient to downward price pressure.
In conclusion, Bitcoin’s current market dynamics — marked by a record high in illiquid supply and a rapid decline in exchange balances — suggest that the cryptocurrency is poised for upward momentum. The scarcity of available Bitcoin, paired with increasing demand from investors, makes the case for continued price growth in the future.
