Long term holders continue to stack Bitcoin at record pace increasing the sell side pressure on Bitcoin’s circulating supply. This is happening more quickly than new coins are being created. To date, 17% of all Bitcoin is deemed illiquid, and that number will grow to more than 25% in the next few years. This growing scarcity, driven by strong holder conviction and new institutional adoption, could have significant implications for Bitcoin's price and market dynamics.
Our latest analysis finds that Bitcoin’s so-called “ancient supply” is increasing. This is the definition of a coin that hasn’t been moved in a decade or more, and they’re growing at a rate faster than new Bitcoins are being mined. This means that around 550 Bitcoin go into the ancient supply category per day, and only 450 Bitcoin are issued on a net basis as new. This daily reduction in ludicrously low supply occurs in fewer than 3% of cases. This statistic may help put into perspective the deep belief of Bitcoin holders.
The Rise of Illiquid Bitcoin
With 94.66% of the total 21 mil Bitcoin already mined, the remaining supply is getting really scarce. At the moment, over 17% of Bitcoin’s supply is considered illiquid. Projections have this number leaping to 30% by 2026, worth 6.3 million Bitcoin. This illiquidity could rise to 25% of the supply by 2034, potentially locking even more supply away statewide.
As it stands today, the ancient supply of Bitcoin—defined as the number of coins held for 10 years or longer—is just over 3.4 million. This hoard is worth approximately $360 billion, at a Bitcoin price of $107,000. A significant portion of Bitcoin accumulates as long-term hold. This significantly lowers the liquid supply and would likely push up prices as demand accelerates.
Institutional Adoption and Supply Dynamics
Also contributing to the growth of illiquid Bitcoin supply is increasing Bitcoin adoption by institutional players. Nation-states, US states, wealth management platforms, public companies—all of them—are getting in line. They’re the ones pushing the long-term holding trend in Bitcoin. This institutional demand is on track to take up the bulk of the available supply.
Those projections mean that even in a worst case bear scenario, we’re still looking at $150 billion in inflows. In a bull case scenario, those inflows could increase to visit $426 billion. According to BitFlyer, at these inflows, they would have absorbed more than 4 million Bitcoin—equivalent to 19% of the total supply. In sum, institutional investors are soaking up a newly created supply of Bitcoin. This move decreases supply available for market manipulation and speculation, potentially increasing price volatility.
Implications for the Future
The growing illiquidity of Bitcoin’s supply has important implications for its future. As increasing amounts of Bitcoin are taken off the market for speculative or long-term holding purposes, the amount of supply in circulation continues to shrink. This increasing scarcity, along with increasing demand, threatens to create upward pressure on prices and greater volatility.
