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Only 22% of Bitcoin is Liquid, Says Glassnode


In a new report published by analytics firm Glassnode, the company finds that almost 78% of the current Bitcoin supply is illiquid. This means that more than half of the Bitcoin existent in the market at present is not available for buying and selling. Only 4.2 million BTC (22%) can be easily bought and sold from the market which are in “constant circulation”.

According to the graph above, 14.5 million BTC is currently illiquid. Over 1 million BTC have shifted from liquid to illiquid this year alone, as investors increasingly decide to hold onto their Bitcoin assets. The number of illiquid BTC is directly proportional to the increase in Bitcoin prices. As BTC prices surge, investors are less likely to liquidate their Bitcoin holdings as they sit in for the long term. 

“If many bitcoins are illiquid, a supply-side crisis emerges – which has a weakening effect on BTC’s selling pressure in the market. Or put differently: A sustained rise of illiquid bitcoins is an indication of strong investor hodling sentiment and a potential bullish signal,” the report reads.

At this point, the fact that there is a decreased supply of Bitcoin for grabs in the retail market especially has certainly become one of the key driving forces behind Bitcoin’s consecutive new highs. FOMO has definitely set in these two weeks, and traders are trying to cash in on what they think is a quick wealth-generating cash cow with the orange coin. A spike in demand coupled with existing Bitcoin holders unwilling to sell has allowed for Bitcoin prices to stay well above the $27,000 range in the last few days.

Bitcoin is now trading at $28,808 at the time of writing according to CoinMarketCap, having reached a new historical all-time-high at $29,244 in the last 24 hours, bringing us ever closer to the $30,000 mark. This price rally is unprecedented even in the 2017 bull run, and there is no telling when prices will dip again, or if it is able to record further highs as it has done so in the past month. To think that Bitcoin began the year at $7,224 on January 1.

Bitcoin certainly is the gift that keeps on giving as we end the last day of 2020 on a literal high note. 

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