The New Bitcoin Investor Landscape
Bitcoin investors have jumped on a bandwagon that’s getting heftier by the minute. Recent data reveals that the driving forces in the crypto domain are now primarily institutions and long-term holders, leading to a remarkable change in the availability of Bitcoin. Almost 80% of the Bitcoin supply is now considered ‘illiquid,’ meaning it’s been tucked away like the last cookie in the jar, and well, nobody’s sharing.
The Illiquid Bitcoin Supply
According to on-chain analytics from Glassnode, as of the start of 2021, approximately 78% of the currency lacks market liquidity. To put it bluntly, if you’re looking for available coins, you might as well be hunting for unicorns. Out of an impressive 18.6 million BTC, only about 4.2 million are actively circulating—this number is akin to searching for a needle in a haystack!
What Does This Mean for Investors?
This shift implies that we are moving away from wild speculation typical of early Bitcoin trends to a more stable market driven by holders who believe in the long-term value of Bitcoin. In the world of cryptocurrency, this is somewhat like deciding to keep your collectible comic books under lock and key instead of selling them on eBay.
The Bullish Outlook
Statistician Willy Woo boldly pronounced this trend as bullish, referring to it as an ‘arms race’ among buyers. As investors hoard more BTC, Woo believes this will lead to a liquidity squeeze—think of it as more and more people trying to fit into an already packed elevator. The economics of Bitcoin planet illustrate how this might keep prices soaring, as the allure to own something increasingly rare becomes irresistible.
Inflation Rate Dynamics
Bitcoin operates on a unique model that decreases the rate of new supply via halving events. Currently, the emission rate sits at 1.8%, which is about as rare as finding a four-leaf clover. Each halving event not only boosts Bitcoin’s perceived value but melds into the circumstances where long-term holding becomes intertwined with substantial price increases.
All Aboard the HODL Train!
With a majority of wallets holding onto their assets and fewer coins being traded, it’s clear that the Bitcoin narrative has shifted. Investors are increasingly adopting the mindset of ‘HODL’ (Hold On for Dear Life)—which, let’s face it, can often feel like engaging in a game of musical chairs, except it’s musical crypto! So whether you’re an old hand or a newcomer to the crypto world, remember: it’s a party up there and nobody’s leaving the dance floor.
