The amount of Bitcoin’s circulating supply that has stagnated for at least a year hit an all-time high (ATH) of 64%, signalling a supply deficit.
Market analyst under the pseudonym Plan C explained:
“An all-time high 64% of the Bitcoin circulating supply has not moved in at least 1 year. I expect this metric to max out at 66-68% before the major uptrend begins.”
Source: Glassnode
According to CoinMarketCap, the circulating supply on the Bitcoin network currently stands at 19.01 million BTC. Around 12.16 million worth BTC remain unchanged.
Based on market forces, if demand rises, the Bitcoin price is anticipated to increase on the foundation of slashed supply.
Currently, the leading cryptocurrency was up by 1.28% in the last 24 hours to hit $41,876 during intraday trading, according to CoinMarketCap.
Bitcoin accumulation is happening across the board
The accumulation of more coins on the Bitcoin network is not only being undertaken by whales but also by smaller addresses.
“The BTC accumulation is not only a whale’s game. Addresses holding <10 BTC have increased their holdings in 2022 dramatically. While the group of addresses with 10k-100k BTC reduced their exposure from 4m to 3.9m BTC in 2022, the different clusters of small addresses accumulated.”
Source: IntoTheBlock
Heavy accumulation of Bitcoin remains between the $37K and $40K zone. Market insight provider CryptoQuant pointed out:
“A price range of BTC between 37K ~ 40K is where this accumulation phase has been ongoing since Mar 2022 until the present.”
Source: CryptoQuant
Meanwhile, Bitcoin recently breached the $40K level based on an uptick in trading volume after experiencing a dormant Easter weekend.
The way bitcoin holders move the BTC in and out of their wallets can often be a strong indicator of where the market might be headed next. Not just the movements of the asset, but where they are being moved to. An example of this is when more investors are moving their holdings to exchanges, which means that sell sentiment has risen and investors are dumping their coins, and vice versa.
In this same line, looking at the liquid and illiquid supply of bitcoin can also be another strong indicator. And this time around, the percentage of bitcoin supply that remains illiquid point towards a bull trend and hold sentiment among investors.
Bitcoin Illiquid Supply At 4-Year Highs
Bitcoin illiquid levels have shot up in the past few years. In 2017, the total illiquid supply of BTC had risen above 76%. This number had remained under this level for the next four years, until now. Currently, the total BTC illiquid supply has risen back above 76% to its present 76.%. It points to more investors being more interested in holding their assets for the long term.
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Related Reading | Bitcoin Supply On Exchanges Hits New Multi-Year Low Of 13.27%
Total liquid and highly liquid supply are split between 23.8% of the supply. The illiquid supply is held in wallets that show little to no history of spending of any kind. These wallets have held on to their holdings for longer than a year for the most part, and their history point towards the owners being in full accumulation mode. The contents of these wallets have barely moved, and if so, have not been in the direction of exchanges.
Price and illiquid supply are now going in opposite directions of each other. While the price is going down, pointing towards bearish sentiment, the volume of illiquid supply is going up. This report shows that illiquid supply went up by 0.27% over the course of a week, showing bullish sentiment among investors.
Exchange Outflows Grow
Bitcoin exchange outflows have also surpassed inflows in recent times, contributing to the growing illiquid supply. The past week saw outflows hit as high as 59K BTC per month leaving exchanges. The illiquid supply has been placed at approximately 51K BTC for the same time period. So, it is only natural to assume that the exchange outflows are being moved to personal storage by investors.
Total change reserves have continued to decline in light of this. For the first time in over two years, the total supply on Bitcoin exchanges has reached 13.27%, one of the lowest ever recorded.
BTC supply on exchanges drops to 13.55% | Source: Glassnode
As for the digital asset, its price movements have maintained a particular trend. With the low momentum in the market, the digital asset has been unable to move upwards out of its $37,000 price point. Meanwhile, it has not fallen below this point either, showing that bulls are still successfully holding up the asset despite being in a bearish trend.
Related Reading | Bitcoin Inflows Suggest Institutional Investors Are Moving Back Into The Market
Exchange outflows and illiquid supply currently point to an accumulation sentiment as fewer and fewer coins are being spent and sold with each downtrend.
BTC down to $37,000 | Source: BTCUSD on TradingView.com
Featured image from The Crypto Associate, charts from Glassnode and TradingView.com
Jurrien Timmer, a macro strategist at financial giant Fidelity, is revising his outlook for Bitcoin (BTC) after the leading cryptocurrency dipped below a key price level.
In a thread to his 86,700 Twitter followers, Timmer says that he was surprised to see Bitcoin not hold the line at $40,000 after falling steadily from its November all-time high above $69,000.
“It has been a bad trip for crypto. The GS [Glassnode] Bitcoin-sensitive equity basket already took out its 2021 lows – not a great sign.
I thought $40k would be a bottom, based on my demand model and on-chain dynamics (via the dormancy flow indicator), but here we are at $35k.”
Source: Jurrien Timmer/Twitter
Next citing past trends of weak hands capitulating to strong hands, Timmer does see the potential for Bitcoin to reverse course and rise once again.
“Bitcoin often overshoots the upside and downside, though, so maybe that’s all that is happening here.
Here is the ‘entity-adjusted dormancy flow,’ which measures the transfer from weak hands to strong hands. It is in the range that has stopped every previous decline.”
Source: Jurrien Timmer/Twitter
Regarding Bitcoin supply and demand, the analyst says,
“The lower Bitcoin falls, the more undervalued it will become on a fundamental basis.”
Source: Jurrien Timmer/Twitter
Timmer also highlights that the Bitcoin-to-gold ratio is “back in the support zone and is 1.51 standard deviations from its trendline.”
Source: Jurrien Timmer/Twitter
The strategist shares his final chart as an indicator that “short-term momentum is now sporting a bullish divergence.”
Source: Jurrien Timmer/Twitter
Timmer concludes his analysis by saying that although Bitcoin has suffered a rough ride that also saw speculative stocks crumble, BTC’s strong fundamentals remain intact.
“Bitcoin clearly got caught in the liquidity storm that is now sweeping the more-speculative side of the stock market.
But unlike non-profitable tech stocks, Bitcoin has a fundamental underpinning that will likely get more compelling over time.
Now that the liquidity tide is going back out, the fundamentals should matter more than ever in 2022.”
At time of writing, Bitcoin is trading sideways at $36,899. It began the year valued at $47,292, marking a 22% decline since.
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Throughout 2021, Bitcoin’s circulating supply has experienced significant changes as part of it has flowed into the Ethereum (ETH) network, exchange-traded investment vehicles, and corporate treasuries in the form of WBTC, according to Arcane Research.
The market insight provider acknowledged that Bitcoin has found other use cases after leaving crypto exchanges in the form of Wrapped Bitcoin (WBTC).
WBTC is an ERC-20 token that represents Bitcoin on the Ethereum network. Therefore, the Bitcoin that backs WBTC is verifiable through a proof of reserve system that prompts a 1:1 verification between minted WBTC tokens and the stored Bitcoin.
Meanwhile, futures open interest on the Bitcoin network has gained momentum by surging 10%. This partly explains why the leading cryptocurrency has been on track based on a price surge.
Bitcoin was up by 5.49% in the last 24 hours to hit $51,026 during intraday trading, according to CoinMarketCap. This shows that open interest and price are positively correlated.
The crypto industry’s M&A experienced notable growth in 2021
The crypto industry has been a beehive of activities as it witnessed significant growth this year. For instance, mergers and acquisitions (M&A) surged by 131% in 2021.
Furthermore, venture capital firms pumped a whopping $30 billion into the crypto sector in 2021, nearly four times its previous all-time high of $8 billion recorded in 2018.
Meanwhile, Bloomberg’s senior commodity strategist Mike McGlonebelieves that Bitcoin’s bull market is not over yet because the benchmark of this cryptocurrency could surge up to $70K in the near future.
With the end of 2021 just around the corner, it remains to be seen how Bitcoin plays out even though it seems Santa has come early after BTC breached the psychological price of $50K.
“Bitcoin addresses with a non-zero balance chart continue to make ATHs, now just under 39.5M.”
This, coupled with the fact that Bitcoin’s illiquid supply is experiencing significant growth, are bullish signs. A Glassnode analyst under the pseudonym TXMC explained:
“Illiquid Supply, the corn held by strong hands, has been one of the remarkable narratives for Bitcoin in 2021. Following the May wipeout, these HODLers were the first to begin stacking again. Illiquid Supply growth is currently outpacing coin issuance by a factor of 3.4x.”
A surge in non-zero addresses shows that the demand for the benchmark cryptocurrency is increasing.
Given that illiquid supply is growing 3.4 times faster than coins mined, then a supply deficit is being experienced in the Bitcoin market, this is bullish based on market forces because an increase in demand and a reduction in supply usually prompts a price surge.
Meanwhile, the percentage of transactions above $100,000 reached historic highs of 99.3% in the fourth quarter of this year. Crypto insight provider IntoTheBlock noted:
“The percentage of Bitcoin’s total volume being managed by institutions and whales reached record levels of 99.3% in the fourth quarter of 2021. This is up from 97.5% in the first quarter of the year and 58% in the first quarter of 2017.”
This correlates with the fact that Bitcoin’s institutionalization increased four-fold in November and hit a weekly average of $1.9 trillion.
Institutional investments have played an instrumental role in Bitcoin’s notable growth this year. For instance, American business intelligence firm MicroStrategy recently bought an extra 7,002 Bitcoins, bringing its portfolio to more than 121,000 BTC.
Bitcoin has been the leading choice for investors in the crypto space being the first of its kind. However, there is more to why the cryptocurrency is so attractive for investors. The limited supply of the digital asset has secured its reputation as a deflationary asset, making it a great inflation hedge. There will only ever be 21 million bitcoins that will be mined.
BTC mining has now been going on for a little over a decade now. For the first eight years or so, mining activities remained pretty flat but picked up once the 2017/2018 bull market picked up. Since then, bitcoins have been mined at a rapid rate and despite multiple halvings taking place over the years, 90% of the total BTC supply has now been mined.
Related Reading | Why “Bitcoin Creator” Craig Wright Came Out Ahead Despite Having To Pay $100 Million
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Majority Of Bitcoin Mined
On Monday, bitcoin officially clocked 90% of its total supply mined. Over 18.89 million BTC has now been successfully mined since bitcoin was first launched in 2009, according to data from Blockchain.com. This number and the rate of mining have led to concerns about an impending supply shock in the market.
As bitcoin grows in popularity, the demand for the digital asset is no doubt going to skyrocket. It is presently estimated that only about 5% of the total global population knows about bitcoin. A recent study showed that 55% of total bitcoin holders got into the market this year alone. As the world becomes one big global village, digital currencies like BTC will see increasing yields.
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Total BTC mined reaches 90% of total supply | Source: Blockchain
Another reason for an impending supply shock is that investors have no intention to sell the assets that they hold. Most BTC holders have proven to be long-term holders and as they continue to hold on to these coins, there will be less supply left in the market. This dwindling market supply will likely see the price of the asset surge immensely in the coming years.
How Long Will It Take To Mine The Rest?
Despite it only taking about 12 years for the majority of the bitcoin supply to be mined, the remaining 10% of the supply will take almost 10 times longer to mind. This is due to the halvings that occur every four years. Basically, the BTC rewards paid out to miners per block mined are cut in half with each halving. Currently, this number sits at 6.25 BTC paid out per mined block.
Related Reading | Bitcoin Active Addresses Recovers Above 1 Million
With each halving, this number will go down greatly, and it is estimated that the last bitcoin will not be mined until 2140, over 100 years from now. This guarantees bitcoin’s longevity, as well as guarantees continued supply, albeit to a smaller extent each time.
BTC falls to $48K | Source: BTCUSD on TradingView.com
That said, not all of the mined bitcoins will go into circulation. About 20% of the total supply is presumed to be lost forever from people either forgetting their private keys or dying and leaving no way for anyone to access these coins. So, even when the total 21 million BTC is mined, there will never be as many as 21 million coins in circulation, contributing to the supply squeeze.
Featured image from NationalWorld, chart from TradingView.com
The weekend was characterized by a sharp decrease in the Bitcoin price after suffering a 20% drop prompting lows of $42K.
BTC funding flipped negative following long liquidations, according to on-chain analyst Dylan LeClair.
The change in funding rate was partly triggered by open interest to the tune of $5.1 billion was closing. Market insight provider Dilution-proof confirmed:
“$5.1 billion (23.4%) open interest was closed, sending the funding rate from moderately positive to firmly negative. The percentage of Bitcoin backed margin actually increased, which is unusual during such long liquidations.”
The massive liquidations in the Bitcoin market made December 4 the second-largest daily shed off in 2021 after a 50% price drop was witnessed on May 19.
At the time, Chinese authorities had started an intensified crackdown on crypto mining, which caught miners unawares. As a result, the price nosedived to lows of $30,000 from highs of $60K.
The situation was dire to the extent that Bitcoin price dropped below the 200-day moving average (MA) for the first time since March 2020. This is a key technical indicator that determines the general market trend because it shows the average of approximately 40 weeks of trading.
Nevertheless, the Bitcoin market has experienced sharp corrections in a bull run in the past. For instance, in the 2017 bull run, Bitcoin witnessed approximately six sharp corrections, with the highest hitting 38%.
Therefore, it seems that significant pullbacks are the norm in Bitcoin’s bull markets.
On the other hand, despite the notable correction witnessed over the weekend, the amount of BTC being hodled is high.
“70% of Bitcoin’s circulating supply is being hodled,” according to Glassnode co-founders Yann & Jan.
By the end of the year, Bitcoin (BTC) is set to make the highest transfer volume of $45 trillion, a scenario not seen in its twelve-year journey.
Yassine Elmandjra, an analyst at ARK Invest, confirmed:
“Bitcoin is on pace to settle twice as much value this year as all of its previous years combined. Bitcoin annual settlement volumes are now ~4 times that of Visa’s and ~6% of the Fedwire.”
By settling a transfer volume of $45 trillion in 2021, Bitcoin will have doubled the value settled in its previous 11 years. This amount will also be four times of Visa transfers.
Therefore, it goes without saying that so far, 2021 has been a significant year for Bitcoin, irrespective of the hiccups witnessed. For instance, despite the leading cryptocurrency nosediving to lows of $28K in May as China intensified its crypto mining crackdown, BTC was able to defy the odds and scale to new highs of $69,000 earlier this month.
Furthermore, institutional interest in Bitcoin has gone a notch higher in 2021, as evidenced by MicroStrategy’s accumulation of more than 121,000 BTC.
Nearly 23% of BTC circulating supply has not moved for more than 5 years
According to crypto educational platform On-Chain College:
“The percentage of Bitcoin circulating supply that has not moved in at least 5 years continues to make All-Time Highs. Almost 23% of the circulating supply has been untouched for at least 5 years. More and more hodling from a macro perspective.”
Hodling is a preferred strategy in the Bitcoin market because coins are kept away from crypto exchanges in cold storage and digital wallets for future purposes. Therefore, this creates a supply deficit because they cannot be readily liquidated and if demand rises, the price increases.
On the other hand, based on the 30-day trend in crypto exchanges, BTC is leaving at a high rate. Furthermore, retail investors and short-term holders are selling to institutions and whales.
