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October 2, 2022
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Report says 78% of Bitcoin is out of circulation

Most Bitcoin is illiquid – 78% of it – and this is driving the current bull run, according to a new report.

Bitcoin’s “liquidity” refers to how much of the asset is in circulation. According to published findings yesterday by blockchain analyst firm Glassnode, only 4.2 million Bitcoin (22%) are available for purchase and sale.

78% of the current #Bitcoin offer is illiquid and therefore hardly accessible for purchase.

This points to an optimistic investor sentiment, with large amounts of $ BTC being accumulated – which reduces selling pressure.

The report says there is a shortage of Bitcoin because it is being bought by major investors. This trend is making the currency more expensive.

“If many bitcoins are illiquid, a supply-side crisis arises – which has a weakening effect on BTC’s selling pressure on the market,” says Glassnode. “Or, to put it another way: a sustained increase in illiquid bitcoins is an indication of a strong sense of confusion by the investor and a potentially bullish signal.”

The report notes that long-term investors who own the cryptocurrency withdraw it from circulation. 2020 was the year that big companies entered the crypto space – especially the business intelligence company MicroStrategy – and are buying Bitcoin and keeping it as a long-term investment.

These companies are unlikely to sell, according to Glassnode, and this is causing the current market to rise. In fact, this year alone, “more than 1 million BTC has become illiquid,” says the report.

But is that a good thing?

What does this mean for the average investor? Pedro Febrero, an analyst at Quantum Economics, told Decrypt that Glassnode’s findings were “excellent news”.

Essentially, when the bitcoin supply is suppressed, the price tends to rise, as demand remains the same or increases


And we know for sure that the demand is increasing. If only 22% of all Bitcoin is in circulation and wealthy individuals continue to acquire Bitcoin, there is no telling how high the price can go.

At its highest point, Bitcoin has tripled in price since July and has increased more than five times since March. At its peak today, Bitcoin’s market capitalization reached $ 528 billion, forming most of the entire cryptocurrency market capitalization, $ 740 billion.

Often, other currencies track the price of Bitcoin. But in the past 24 hours, the largest currencies by market have not uniformly followed Bitcoin’s success.

The second most popular currency, Ethereum, which increased by the same amount as Bitcoin last week, increased by 0.23% the previous day.


And XRP, the currency besieged by a lawsuit that the SEC imposed on its creators, rose 9% the day before, but fell 38% last week.


Source: Decrypt

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