Despite volatile prices that have seen BTC lose its value by 7% overnight, BTC investors are holding on to their Bitcoin. According to data published by crypto market data aggregator Glassnode, “liquid” BTC wallets have shed 270,000 BTC over the past month, up from 175,000 BTC at the start of the January.
BTC liquidity has been falling since April
The data further reveals that bitcoin’s liquidity supply has consistently fallen over the last nine months with liquid supply currently sitting at 21.3% and showing no signs of reversing. Bitcoins’ increasingly illiquid supply could be bullish for its price with new institutional traders vying for a piece of the cake. According to Glassnode estimates, nearly 80% of the 18.6 million circulating BTC are currently stored in “illiquid” wallets.
An illiquid wallet according to Glassnode is one that has less than 25% of the BTC received has been transferred out across the entity’s life. A highly liquid wallet, on the other hand, according to Glassnode is a wallet with the majority of BTC transferred back into circulation with less than 25% of the inflows held onto.
Institutions going long
Institutional investment is reportedly a big part of the reason why BTC supply is dwindling. Wallet tracing service Bitcoin Treasuries currently estimates that 33 institutional entities have purchased about 1.2 million Bitcoins or 6.5% BTC’s circulating in supply. Companies such as Grayscale have increased their holdings by approximately 25,000 BTC with a portfolio of 641, 523.7 BTC as of January 20, 2021. More and more institutional money is being wired into BTC with demand going up 500% according to Swiss investment firm Swissborg.
With the world’s largest asset manager Blackrock following up their search for a crypto expert by listing Bitcoin derivatives as a possible investment, it’s highly likely that BTC supply will continue to dwindle. It is highly probable that depressed supply could see a surge in BTC price.
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