November 8, 2023 at 17:39 GMTModified date: November 8, 2023 at 17:39 GMT
November 8, 2023 at 17:39 GMT

Bitcoin long-term holder supply stands shy of all-time high

Bitcoin ($BTC) long-term holders have been observed clasping onto their coins rather than selling them, with the supply close to creating all-time highs.

Bitcoin ($BTC) long-term holders have been observed clasping onto their coins rather than selling them. Data has revealed that the supply held by long-term holders (LTH) of the coin is close to creating all-time highs.

This was laid out in a Wednesday blog post by Glassnode titled ‘The Tightening of Supply’. Analysts of the on-chain market intelligence firm observed “impressive rates of accumulation taking place” for Bitcoin.

The accumulation trend

LTHs are becoming increasingly unwilling to part with their holdings. Other measures of supply like illiquid supply and coins HODLed is also at historical highs for the top coin. 

A significant proportion of the circulating supply has been held for over a year, with 68.8% of supply last active more than one year ago, 57.1% last active over two years ago, and 41.1% last active over three years ago. 

In particular, the proportion of the first lot is hovering around all-time-high levels, said the report.

Increasing illiquid supply

The illiquid supply metric is currently at an all-time high too at 15.4 million $BTC, with a monthly net increase rate. The monthly rate of change for illiquid supply is within a multi-year period of net gains, currently increasing at a rate of over 71,000 Bitcoin per month.

According to Glassnode analysts, this increase in illiquid supply has moved in tandem with investors withdrawing their digital assets from exchanges. “The data suggests investors are continuing to withdraw their coins into custody, with over 1.7 million Bitcoin doing so since May 2021,” they added. 

Divergence in holder behaviour

There is also a notable divergence between the supply held by long-term holders and short-term holders. While the former is just shy of making all-time highs, the latter is at all-time lows. This suggested a growing tightness within the Bitcoin supply, as existing holders are becoming increasingly unwilling to part with their holdings. 

Historically, LTHs tend to wait for the market to reach new price all-time highs before they start distributing their holdings significantly, said Glassnode. For them, the Sell-Side Risk ratio has increased slightly too. However, it remains historically low, suggesting that despite the price increases, LTHs are not selling their holdings in large numbers. 

The analysts added that this metric currently showed similar structure to the 2016 and late 2020 eras, in which there were periods of tight overall $BTC supply.

Smaller entities 

When looking at the accumulation trends of other smaller entities like Shrimps and Crabs, significant inflow was noted across all wallet sizes. The report stated that they all accumulated at a rate equivalent to 92% of newly mined supply.

The majority of LTH coins have a cost basis between $25k and $30k. This indicated that most LTHs are now in a profitable position. The group have been demonstrating a strong conviction in their investment, as evidenced by their continued accumulation and reluctance to sell, contributing to the overall tightness of the Bitcoin supply.

With the Bitcoin halving about just a few days away and a US spot ETF looking increasingly likely, investor excitement and sentiment have been on a rise. The report suggested that the $30k to $31k range is a key area of interest. It also added that the market reaction if the price returns to $30k would be something to watch.