Bitcoin investors have a reputation for buying and holding for long periods of time. And this has resulted in the circulating supply of Bitcoin becoming quite slim when compared to the actual supply. At present, the inactive supply of Bitcoin continues to increase, with 60% of present coins being static for more than 1 year. This huge number shows how long-term investors continue to hold tokens as they believe in Bitcoin’s future potential.
Bitcoin investors don’t want to sell
A report from Glassnode suggests that over 60% of Bitcoin supply has been sitting on different wallets for more than a year. Out of this, around 5% is supposed to be the holdings of Satoshi Nakamoto, Bitcoin’s founder. And a lot of holdings are also static for Tesla and Microstrategy. After this, we have investors that are invested in Bitcoin for quite a long time. They have seen so many market cycles that this volatility is not concerning at all.
Most of the price of action of Bitcoin is influenced by the relatively small supply, which is circulated among traders and short-term investors. This is why there is so much volatility as the liquidity isn’t that high and is on the downtrend with time. This is a good thing, though, as it clears off two things. First that the bull market is over, which generally happens when these diamond hands start to sell. And secondly, Bitcoin is a bubble that also happens when long-term investors become short-term traders.
This is really good
We have seen many more flash crashes in Bitcoin than short squeezes. Though, the decreasing liquidity and increasing inactive supply of Bitcoin makes me think that a huge surge in Bitcoin’s price might be just around the corner. The last time Bitcoin’s inactive supply was above 60% was in early 2016, and the price saw a huge pump after that. Though the markets have changed drastically from that time, we could at least be bullish. Long-term hodlers understand this, and this explains why they are not selling.
What are your thoughts as the inactive supply of Bitcoin continues to increase? And do you think low liquidity will be the prime reason for a parabolic price increase this year? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.
Also Read: Joe Biden will issue a crypto executive order this week.
