Bitcoin holders are growing by the day. With the digital asset’s history, most investors have realized that to make returns, holding is the best way to go. Nevertheless, there are still “paper hands” investors who continue to dump their coins with each market fluctuation. Such has also been the case given the recent downtrend but this time around, there are more bitcoin holders waiting to absorb all the supply being dumped on the market.
Holders Are Accumulating
Even with the downtrend in the value of bitcoin, holders have not stopped accumulating coins. This has led to a new local high of 72% of all USD being stored in bitcoin by holders who have held older than three months. This is quite common in bear markets where long-term investors are more likely to slow their spending because they see more value in a digital asset.
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Most of these numbers are held by holders who have been holding around 3 months to 6 months. Although these holders are more likely to hold for even longer. They have continued to absorb an increased coin volume over the last three months.
BTC older than 3 months at 72% | Source: Glassnode
More bitcoin volumes are maturing to the same three months age every 30 days, with over 335K BTC maturing each month. This is 12.2x the daily coin issuance realized by miners.
This trend is not dissimilar to that observed in mid-2022, and again in June to September 2021. Both times, these accumulations have held significant implications for the digital asset, heralding the start of another bull rally each time. The resulting uptrend following both times was indeed powerful.
Bitcoin Illiquid Supply Grows
Another metric that serves as evidence that bitcoin long-term holders are absorbing more supply is the volume of illiquid supply. This volume has been growing steadily over the past year and has continued to do so into the new year. It proves that the current market remains a holder market.
The illiquid supply of bitcoin shows that the volume of coins held in wallets that have little to no history of spending is high. Most of these are the wallets of holders who accumulate by dollar-cost averaging or cold wallets. These coins are not spent in any way nor are they moved to exchanges to sell. The holders are doing the same thing and that is accumulating.
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The volume of illiquid supply recently touched a new high according to data from Glassnode. It had peaked back in May 2021 but has now surpassed it at 76.3%. This brings the market back to 2017 market cap levels. This metric can spell bad news as much as it can spell good news.
BTC illiquid supply grows | Source: Glassnode
The good news is that holders are accumulating their coins. But the bad news remains that anytime the illiquid supply has peaked in the past, a major sell-off event had followed, seeing a crash in the price of the digital asset. As illiquid supply volume touches a new high, it is now a waiting game to see if history will truly repeat itself once more.
BTC recovers above $43,000 | Source: BTCUSD on TradingView.com
Featured image from The Guardian, charts from Glassnode and TradingView.com