The Bitcoin (BTC) markets have been consolidating since the beginning of the year, but calculations on the network paint a more positive picture as more assets become illiquid.
Network analyst provider Glassnode examines Bitcoin supply estimates in its weekly report on Monday to better understand long-term macroeconomic trends.
The results show that although the asset has traded sideways this year, several BTCs have become illiquid. There is an acceleration in the growth of illiquid supplies, which today make up more than three quarters, or 76%, of the total circulating supply.
Glassnode detects illiquidity when BTC moves to a wallet with no account history. The liquid supply to BTC, which represents 24% of the total, is in wallets that use or trade regularly, such as exchanges and hot wallets.
“We see that in the last months of 2021, even after price adjustments, coins moved rapidly from liquid to illiquid wallets.”
The figures indicate that more bitcoins are being moved for storage, which indicates an increase in hoarding and hoarding habits. The decline in the very liquid offer also indicates that there will be no major sales or capitulation in the near future.
Display of liquid and illiquid bitcoin as a percentage of total. Source: Glassnode
The researchers concluded that these conditions indicate a “divergence between what appears to be constructive supply chain dynamics versus bearish or neutral price action.”
About the topic: There are only 1.3 million bitcoins left on cryptocurrency exchanges.
In the same report, Glassnode said that the total supply of long-term shareholders has stabilized in the last month or so. This indicates that at this point, long-term investors have stopped using or selling coins and have become scammers or even scammers. “This provides a different constructive perspective on market beliefs,” he concluded.
The current supply from long-term contract holders is 13.35 million bitcoins, only 1.1% below the October high of 13.5 million bitcoins. Glassnode defines these long-term owners as wallets or accounts that hold bitcoin for more than 155 days.