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Bitcoin's Illiquid Supply Reaches Record High, Exchange Balances Hit Multi-Year Low

02/12/2024 16:13

According to Odaily, Bitwise's Head of European Research, André Dragosch, recently shared insights on the current state of Bitcoin's supply dynamics. Dragosch highlighted that Bitcoin's illiquid supply has reached an unprecedented level, while the balances held on exchanges have dropped to their lowest in several years. This shift indicates that nearly 75% of Bitcoin's total supply is now considered 'illiquid,' meaning it is held in wallets that are not actively trading or moving the cryptocurrency. In contrast, the proportion of Bitcoin available on exchanges has fallen to less than 14%. This trend underscores a growing scarcity in Bitcoin's supply, as more of the cryptocurrency is being held long-term by investors rather than being actively traded. The increasing illiquidity suggests that a significant portion of Bitcoin holders are opting to store their assets rather than sell them, potentially in anticipation of future price increases or as a hedge against economic uncertainty. This behavior could have implications for Bitcoin's market dynamics, as reduced availability on exchanges might lead to increased price volatility when demand surges. The data presented by Dragosch reflects a broader trend in the cryptocurrency market, where long-term holding strategies are becoming more prevalent among investors. As Bitcoin's supply becomes more constrained, market participants may need to adjust their strategies to account for the reduced availability of the asset on trading platforms. This development could also influence the overall perception of Bitcoin as a store of value, as its scarcity becomes more pronounced in the market.

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