Bitcoin supply held by long-term holders hits all-time high

Bitcoin’s recent rally to a 2023 high is backed by on-chain and sentiment data.

Data from Glassnode suggests that Bitcoin (BTC) is in an accumulation pattern with its available supply reaching a new historical low. According to the report, Bitcoin’s illiquid supply and long-term holders cohort rise.

As Bitcoin’s supply tightens, available BTC is being purchased by smaller, long-term holding entities.

Bitcoin accumulation among a majority of investor cohorts and the bullish conviction of long-term holders equates to investors gobbling up “92% of the newly mined supply” according to Glassnode analysis.

“If we isolate only entities on the smaller end of the scale, such as Shrimps (<1 BTC), Crabs (1-10 BTC) and Fish (10-100 BTC), we can see their accumulation pattern is quite significant. The combined rate of balance increase for this sub-group is currently equivalent to 92% of newly mined supply and has remained elevated since May 2022.”

*Entity Bitcoin balance changes versus issuance. Source: Glassnode*

On the backs of smaller entities gobbling up Bitcoin’s minted supply, long-term holders have reached new highs versus short-term holders, something not seen since July 2023. In addition to the solid long-term holder ratio, short-term holder supply diminished to all-time lows.

*Long-term versus short-term Bitcoin holder ratio. Source: Glassnode*

The combined effect is creating a tightening of the BTC supply available for purchase, which is possibly helping to keep Bitcoin price above $34,000 and providing strong support above $30,000.

In comments to Cointelegraph, LMAX Group market strategist Joel Kruger explained how a Bitcoin price breakout to $40,000 could occur,

“We don’t see anything specific going on with the price of Bitcoin to start the week other than the usual run of steady demand from medium and longer-term players looking to build exposure. If anything, Bitcoin has actually been more contained of late relative to currencies and risk assets, which have been in notable rally mode on expectations for a more accommodative shift in Fed policy in the aftermath of a run of softer U.S. economic data. Technically speaking, it would take a break above $36,000 to really turn heads and trigger the next wave of bullish momentum.”

Illiquid coins with Bitcoin’s finite supply are typically a bullish market indicator. The illiquid Bitcoin supply continues on pace for monthly inflows for another year. The net increase of illiquid Bitcoin is 71,000 BTC per month.

*Bitcoin illiquid supply change. Source: Glassnode*

The growing confidence in Bitcoin amidst the tightening supply is not limited only to smaller entities. Nearly all entity cohorts are increasing their Bitcoin holdings year-to-date, an action that is well illustrated by the chart below.

*Bitcoin accumulation across all cohorts. Source: Glassnode*

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.