Bitcoin Faces Challenges As Illiquid Supply Reaches New Highs

According to CoinDesk, the $100,000 sell wall for Bitcoin (BTC) is proving difficult to overcome, with $384 million available for sale between the current price and this significant milestone. Despite this, supply data indicates potential upward pressure. The term "illiquid supply" refers to Bitcoin held by long-term holders (LTHs) that is not actively traded. Glassnode data reveals that illiquid supply has increased by over 185,000 tokens in the past 30 days, reaching an all-time high of 14.8 million BTC, which constitutes 75% of the total circulating supply of just under 20 million. This 185,000 increase is the second-largest 30-day change this year, suggesting that investors are currently more inclined to hold rather than trade. Previous research by CoinDesk indicates that sales by LTHs are nearing their conclusion. Since November 26, LTHs have been accumulating, adding over 2,000 BTC to their holdings. This trend may signal the end of profit-taking for this group, potentially reducing sell pressure in the market. Additionally, Bitcoin tokens have been rapidly exiting exchanges since the beginning of the latest bull run in early November, reversing a nearly two-year trend of stable exchange levels. This shift is seen as a positive indicator of increased investor demand. However, a broader five-year perspective shows a less optimistic scenario, as Bitcoin on exchanges remains within a narrow range of 2.7 million to 3.3 million tokens. For a more sustainable bull run, Bitcoin will need to continue leaving exchanges, indicating ongoing investor interest rather than demand driven by derivatives, which often signals leverage. Andre Dragosch, head of research at Bitwise, noted that Bitcoin's illiquid supply has reached a new all-time high while exchange balances have hit a multi-year low. He stated that nearly 75% of the supply is considered 'illiquid,' while less than 14% remains on exchanges, highlighting the intensifying scarcity of Bitcoin's supply.