Despite rising prices, Bitcoin investors are rapidly closing their BTC for the long term, taking 270,000 BTC from the liquid supply in the past 30 days.
According to data Published by crypto market data aggregator Glassnode, “liquid” Bitcoin wallets have lost 270,000 BTC in the last month, up from 175,000 Bitcoin in early January.
The data shows that Bitcoin’s (BTC) the liquidity stock has been declining consistently over the past nine months, with a liquidity stock currently standing at 21.3% and showing no signs of reversing.
Bitcoin’s increasingly illiquid offering could be bullish for its price, with new retail and institutional traders vying for an ever-diminishing supply. Glassnode estimates that nearly 80% of the 18.6 million Bitcoin in circulation is currently stored in ‘illiquid’ wallets.
According to Glassnodea Bitcoin wallet is considered illiquid if less than 25% of the Bitcoin received has been transferred over the life of the entity. In contrast, to be considered highly liquid, the majority of Bitcoin must be put back into circulation, holding less than 25% of the inflow.
Of the 3.9 million BTC Glassnode describes as highly liquid, 61% or 2.38 million is held by centralized exchanges. Their balances have also fallen, with data from an analytics company CryptoQuant indicating that stock markets’ reserves have shrunk by 13.8% since July.
Raising institutional investments can be a major driver of Bitcoin’s liquidity supply depletion, using wallet tracking service Bitcoin Treasury Chests currently estimates that 33 institutional entities have amassed more than 1.2 million BTC or 6.5% of Bitcoin’s circulating supply.
In the last days, Grayscale increased its holdings by approximately 25,000 BTC with a portfolio of 641,523.7 BTC on January 20, 2021. To put this in perspective, approximately 900 Bitcoin are struck every day. According to Glassnodehowever, since July 2020, on average, only a third of them are actually sent to exchanges.
data of investment company SwissBorg shows that in the second half of 2020, institutional investors bought on average more than 230% of the newly minted BTC. By adding the purchases from PayPal and Square (along with the estimated amount of Bitcoin lost each day), demand can reach up to 500% of the new supply.
Earlier today, the world’s largest asset manager BlackRock archived with the SEC, listing Bitcoin derivatives as a potential investment. The company entered 2021 with $ 7.81 trillion in assets under management, more than seven times the total cryptocurrency market cap.