Current State of Bitcoin’s Liquid Supply
Bitcoin’s liquid supply has entered a phase of shrinkage, with only 36% of circulating BTC being actively moved on-chain over the past six months. This decline shows a stark contrast when compared to the 2017 bull market, where a whopping 50% of Bitcoin’s supply circulated during the same timeframe. It appears that many long-term investors are holding onto their coins, rather than throwing them into the wild crypto marketplace.
Understanding the Coin Movement
The dynamics of coin movement paint a fascinating picture. In bull markets, older coins tend to circulate more, suggesting that investors are keen to take profits. As observed in the past, around 50% of Bitcoin’s supply was still younger than six months during previous market peaks. Today, we’re sitting pretty at just 36%, indicating that investors are either optimistic about future prices or simply planning to stick it out rather than cashing in now.
Whales & Their Strategy
Bitcoin’s whales, which are investors or entities holding large amounts of Bitcoin, seem to be in a holding pattern. With the market being as volatile as a cat on a hot tin roof, these whales are betting on higher prices down the line. This behavior suggests a sentiment of wait-and-see, bottled up with a dash of FOMO (fear of missing out) as they eye potential price surges.
The Elusive Circulating Supply
Currently, the circulating supply of BTC stands at 18.66 million, which is approximately 88.85% of the capped total of 21 million. That’s a tantalizing figure, but don’t forget—around 20% of all Bitcoin has either been lost or stolen. This unfortunate reality means the actual circulating supply could be considerably lower, making Bitcoin an even scarcer commodity. Less supply equals higher potential value; just ask anyone trying to buy a concert ticket last minute.
On-Chain Activity & Market Capitalization
Data shared by famed crypto analyst Willy Woo indicates that despite the shrinking liquid supply, there’s still plenty of on-chain activity happening. Bitcoin’s market capitalization has hovered above the $1 trillion mark, with 7.3% of the BTC supply changing hands amid this high valuation. This high level of activity suggests a robust investor interest, and, as Woo points out, this might mean that we’re unlikely to see Bitcoin dip below that $1 trillion threshold again.
“URPD gives a clearer picture of price discovery by showing the price when coins last moved, assuming they were purchased by investors,” Woo explains.
However, it’s worth noting that all on-chain movements don’t always equate to thrilling trading activity, as exchanges often shuffle their assets around like they’re playing a game of musical chairs.
