Recent on-chain analysis indicates that the Bitcoin Illiquid Supply has reached an unprecedented level. Here’s a breakdown of its implications for Bitcoin.
74% Of Bitcoin Supply Is Now ‘Illiquid’
Analyst James Van Straten shared insights on X regarding the upward trend in Bitcoin’s Illiquid Supply. According to the on-chain analytics firm Glassnode, ‘liquidity’ for Bitcoin is measured by the cumulative outflows and inflows of an entity over time.
An ‘entity’ is defined as a group of addresses identified by Glassnode as belonging to a single investor. Based on this metric, entities fall into three categories: Illiquid, Liquid, and Highly Liquid. Illiquid entities are characterized by high inflows and low outflows, with a liquidity ratio of less than 0.25. Conversely, Highly Liquid entities have a liquidity ratio over 0.75, meaning their inflows and outflows are balanced. This Illiquid Supply reflects the portion of Bitcoin that is unlikely to be moved soon, held by investors with a history of minimal selling. Meanwhile, the Highly Liquid Supply includes tokens that are frequently traded.
The Liquid Supply sits between Illiquid and Highly Liquid, comprising those engaged in varying trading levels with liquidity ratios between 0.25 and 0.75.
Importantly, Glassnode’s approach results in gradual transitions in these categories, rather than abrupt changes; an entity at a liquidity ratio of 0.25, for example, would split its classification evenly between Illiquid and Liquid.
Here’s a chart from Van Straten that illustrates the trends in Bitcoin’s Illiquid and Liquid + Highly Liquid Supplies:
The chart shows a notable increase in Bitcoin’s Illiquid Supply since the year’s beginning, indicating that investors are accumulating more coins. This has now peaked at approximately 14.7 million BTC, representing about 74% of the total circulating supply.
“It’s intriguing to see the widening gap between illiquid versus liquid + highly liquid,” remarks the analyst. “The trading supply continues to decline, while market sentiment leans toward HODLing.”
Current BTC Price
As of now, Bitcoin is valued at around $64,900, reflecting a rise of over 3% in the last week.
