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Bitcoin markets have been consolidating since the beginning of the year, but the chain’s metrics paint a more positive picture as more and more of the asset becomes illiquid.
In its January 3 weekly report, blockchain analyst Glassnode looked at bitcoin supply metrics to gain a better understanding of long-term macroeconomic trends.
The results showed that while the asset has traded sideways so far this year, more BTC is becoming illiquid. The growth of illiquid supply accelerated, which now accounts for more than three quarters, or 76%, of the total circulating supply.
Glassnode defines illiquidity as moving BTC to a wallet with no history of spending. BTC liquid stock, accounting for 24% of the total, is in wallets that regularly spend or trade using exchanges and hot wallets.
“We can see that in the final months of 2021, even as prices adjusted, there was an accelerated movement of coins from liquid to illiquid wallets.”
The numbers indicate that more and more bitcoin is being transferred to vaults, indicating a growing habit of holding and hoarding. The cut in highly liquid supply also hints that there may not be a major sell-off or surrender in the near future.
The researchers concluded that these conditions indicate “a divergence between seemingly constructive on-chain supply versus bearish and neutral price action.”
In the same report, Glassnode said the total supply in the hands of long-term holders has plateaued in the past month or so. This suggests that long-term investors have stopped spending or selling coins and at this stage have become holders or even accumulators.
Currently, the supply volume held by long-term investors is 13.35 million BTC, which is just 1.1% less than the October high of 13.5 million coins. Glassnode defines these Long Term Holders (LTH) as wallets or accounts that hold Bitcoin for more than 155 days.
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