Bitcoin markets have been consolidating since the beginning of the year, but on-chain metrics are showing a more positive outlook as more of the asset becomes illiquid.
The on-chain analysis provider Glassnode has delved into Bitcoin supply metrics to get a better look at long-term macro trends. in their weekly report for January 3.
The results revealed that, Although the asset has been trading sideways so far this year, more BTC has become illiquid. There has been an acceleration in the growth of illiquid supply, which now comprises more than three-quarters, or 76%, of the total supply in circulation.
Glassnode defines illiquidity as the moment when BTC is moved to a wallet with no spending history. The liquid supply of BTC, which makes up 24% of the total, is in wallets that you regularly spend or trade, such as exchanges and online wallets.
“We can see that during the last months of 2021, even when prices corrected, there has been an acceleration of liquid currencies, in illiquid wallets.”
The figures suggest that more Bitcoin is being transferred to storage, indicating an increase in hodling and hoarding habits.. The decline in highly liquid supply also hints that there may not be a major sale or capitulation event at any point in the near future.
The researchers concluded that these conditions indicate “the divergence between what appears to be constructive on-chain supply dynamics, compared to bearish-neutral price action”.
In the same report, Glassnode stated that the total supply in the hands of long-term holders has stabilized over the last month or so. This suggests that Long-term investors have stopped spending or selling coins and have become hodlers or even hoarders at this stage. “This provides another constructive insight into market conviction,” he concluded..
The current supply in the hands of long-term holders is 13.35 million BTC, which represents a decrease of just 1.1% compared to the October maximum of 13.5 million coins. Glassnode defines these long-term holders (LTH) as wallets or accounts that have held their Bitcoin for more than 155 days.
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