Volume of Bitcoin’s Illiquid Supply Points to Growing Bullish Sentiment


The way bitcoin holders move the BTC in and out of their wallets can often be a strong indicator of where the market is headed next. Not only the movements of the assets, but also where they are moved. An example of this is when more investors move their holdings to exchanges, meaning sales sentiment has risen and investors dump their coins, and vice versa.

Along the same lines, looking at bitcoin’s liquid and illiquid supply can also be another strong indicator. And this time, the percentage of bitcoin stock remaining illiquid is pointing towards a bull trend and holding investor sentiment.

Bitcoin illiquid stock at 4-year high

Bitcoin’s illiquid levels have skyrocketed in recent years. By 2017, the total illiquid supply of BTC had risen above 76%. This number has remained below this level for the next four years so far. Currently, the total illiquid supply of BTC has risen above 76% again to the current 76.%. It indicates that more investors are more interested in holding their assets for the long term.

Related literature | Bitcoin Supply on Exchanges Hits New Multi-Year Low of 13.27%

The total liquid and highly liquid inventory is distributed over 23.8% of the inventory. The illiquid supply is held in portfolios that have little to no history of spending. These wallets have held their holdings for over a year for the most part and their history indicates that the owners are in full accumulation mode. The contents of these wallets have barely moved, and if so, not in the direction of exchanges.

Illiquid supply reaches four-year highest level | Source: glass node

Price and illiquid supply are now moving in opposite directions. As the price falls, suggesting bearish sentiment, the volume of illiquid supply is rising. This one report shows the illiquid stock is up 0.27% over the course of a week, demonstrating bullish sentiment among investors.

Growing outflows from exchanges

Bitcoin exchanges outflows have also outpaced inflows in recent times, contributing to the growing illiquid supply. The past week has seen outflows reach 59K BTC per month, causing the exit of exchanges. The illiquid stock has been placed at around 51K BTC for the same period. So it’s only natural to assume that investor outflows of currency are being moved to personal storage.

In light of this, the total change reserves have continued to fall. For the first time in more than two years, total supply on Bitcoin exchanges has reached 13.27%, one of the lowest ever recorded.

BTC supply on exchanges drops to 13.55% | Source: glass node

As for the digital asset, the price movements have maintained a certain trend. With the low momentum in the market, the digital asset has been unable to rise from its $37,000 price point. Meanwhile, it has not fallen below this point either, showing that bulls are still holding the asset successfully despite a bearish trend.

Related literature | Bitcoin Influx Suggests Institutional Investors Are Going Back To Market

Currency outflows and illiquid supply currently indicate accumulation sentiment as fewer and fewer coins are issued and sold with each downtrend.

BTC to $37,000 | Source: BTCUSD on TradingView.com
Featured image from The Crypto Associate, Charts from Glassnode and TradingView.com

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