Data Shows 78% of the Circulating Bitcoin Supply Is Illiquid, Only 4.2M BTC in Constant Circulation

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Onchain statistics show that 78% of the circulating Bitcoin supply is illiquid and, according to Glassnode research, barely accessible. Data shows that analysts have classified 14.5 million bitcoin as illiquid and only 4.2 million bitcoin as continuously floating.

One of the most valuable parts of the Bitcoin (BTC) protocol is the fact that the system is mathematically provable and bitcoins are scarce. When Satoshi Nakamoto created the crypto asset, the inventor set the delivery cap at 21 million coins issued, and today there are approximately 18.58 million BTC in circulation.

This week, researchers from onchain analytics company Glassnode reported the number of liquid and illiquid coins currently in existence.

Despite the fact that the exchanges have a huge amount of Bitcoin (BTC) available for sale and trading, Glassnode researchers say 78% of current supply is illiquid.

On Twitter, Glassnode wrote: “78% of the circulating Bitcoin supply is illiquid and therefore barely accessible for purchase. This indicates an optimistic investor sentiment as large amounts of BTC are being hoarded – which reduces selling pressure, ”the researchers emphasized.

The analysts added:

Bitcoin liquidity is defined as the average ratio of BTC received and issued between companies. We show that 14.5 million BTC are currently classified as illiquid and only 4.2 million BTC are in constant circulation that are available for purchase and sale.

Data shows that 78% of the circulating bitcoin supply is illiquid, with only 4.2 million BTC in constant circulation

The onchain data suggests that the current upward trend in the value of crypto assets has been fueled by liquidity issues. For example, major financial institutions and well-known hedge fund managers bought Bitcoin in bulk over the course of the year.

The list of Bitcoin Treasuries has grown rapidly this year. 29 well-known companies are capturing 1.1 million BTC to be held for treasury reserves.

“In the course of 2020, a total of 1 million additional BTCs have become illiquid – investors are increasingly crowding,” the analysts from Glassnode continued. The increasing illiquidity suggests that “the current uptrend was (in part) being driven by this emerging Bitcoin liquidity crisis,” the researchers added.

Glassnode concluded that the amount of liquid and illiquid Bitcoin in circulation has a “clear relationship with the BTC market”. Data shows that since 2017, the illiquid supply of Bitcoin has grown faster than Bitcoin spent by Bitcoin miners.

This pattern was also observed during the ramp-up of crypto assets in 2017, as the onchain researchers explained in detail.

According to the Bituniverse data on the “Exchange Transparent Balance Rank” from Peckshield, Etherscan and Chain.info, exchanges hold fewer Bitcoins than last year.

Coinbase is the leading exchange in terms of BTC reserves held at 870,000 BTC. This is followed by Huobi (252,000 BTC), Binance (215,000 BTC), Bitfinex (142,000 BTC) and Kraken (137,000 BTC).

What do you think of the number of liquid and illiquid bitcoins in existence? Let us know what you think on this matter in the comments section below.

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Bitcoin, Bitcoin (BTC), Bitcoin supply, Bituniverse reserves, BTC, BTC supply, crypto asset, financial institutions, Glassnode, Glassnode data, hedge fund manager, illiquid, liquid, liquidity crisis, liquidity problems, onchain data, treasuries

Photo credit: Shutterstock, Pixabay, Wiki Commons, Glassnode Charts, Twitter,

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