Looking at the price chart of a cryptocurrency is not enough to anticipate its movements or understand the psychology of its market. The actual data to consider is often found elsewhere, such as the distribution of the available quantity (supply). This principle of tokenomics can even discourage investment in some projects when too many whales are already sharing the pie.
This is a frequently leveled criticism of Bitcoin, which some of its sworn enemies like Nassim Nicholas Taleb like to paint as manipulated. Nevertheless, his offer has never been so fluid according to published – and growing – data from analytics site Glassnode. Indeed, more and more entities now hold less than 10 BTCwhich is too little to obtain the status of cetacean.
Don't confuse a whale with a locked wallet. In this case, the question is not how many BTC are in an account, but how many are in a wallet. the probability that its owner decides to sell what it contains. And clearly the current trend is towards illiquidity.
Bitcoin – More than 78% of its supply is illiquid
Bitcoin is a cryptocurrency in its own right. And anyone who still had doubts can see how special it is. it doesn't react like the rest of the market to the current intense regulatory pressure. On the contrary, everything suggests that it could even become a refuge from the identity crisis of the altcoin market. And its recent 20% rally seems to confirm that it is on the cusp of the $31.000 resistance level.
At the same time, centralized cryptocurrency exchange (CEX) platforms have been registering for some time a real BTC hemorrhage. This migration has been accompanied by a historic decline in trading volumes, which are currently at their lowest level in 4 years. The main consequence of this, which is inversely proportional, is onean increasingly illiquid offer. In other words, held by individuals known for their preference for hoarding.
"This observation is further supported by the divergence between FX balances and the volume of coins held in illiquid portfolios, i.e. those with little or no spending history. Illiquid supply hit a new ATH of BTC 15,2 million this week, while FX balances dropped to their lowest levels since January 2018 at BTC 2,3 million.. "
In fact, more than 78% of the available amount of BTC is currently considered to be outside the active market. This principle has led to a real scarcity of supply actually in circulation. With 15,2 million units piling up, this trend is forcing a new illiquid ATH on the Bitcoin market.
Bitcoin – Illiquid? So?
The illiquid nature of the Bitcoin market is experiencing a dramatic increase. Or at least, that's what the Glassnode site data on the matter indicates, con an estimated increase of 215.000 BTC in the past four weeks , a record not seen since December of last year. But what does this mean for the BTC price?
In terms of market psychology, it indicates that despite the current regulatory tensions, investors remain highly confident in Bitcoin. And from a purely mathematical point of view, the tightness of actually available supply triggered by this illiquid trend "supports the hypothesis of a gradual and steady accumulation", according to the analysis site Glassnode.
"HODLers are currently hoarding coins at a rate of around 42.200 BTC/month, which suggests that price-sensitive entities are absorbing a non-negligible portion of the currently available supply. If we compare this behavior to previous cycles, we can see that this pattern of steady and gradual accumulation started just over 2 years ago, suggesting that it could be another 6-12 months ahead.. "
Because historically speaking, a greater and faster accumulation on the Bitcoin market very often coincides with an increase in prices to come. Especially when it happens within a year of the next halving, also known as a positive yield trigger event. But beware, none of this means that Bitcoin will explode in a straight line from here on out. After all, anticipating an uptrend can sometimes mean having to wait several months for it to materialize…
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