It’s now becoming challenging to buy bitcoins, as about 78% of BTCs in circulation (18.9 million BTCs) is held by large entities that have been holding bitcoin as long-term investments.
What you need to know
Only 21 million BTCs are ever going to be produced in total and presently, there are about 18.9 million BTCs in circulation. This shows a differential of about 2.1 million BTCs that are left to be produced, not forgetting that about 4.5 million Bitcoin have been lost forever.
It also means that liquidity is drying up, as demand for the world’s most popular crypto hits record highs.
A study by Glassnode, a crypto analytic firm, explained the reasons for the difficultly in buying Bitcoin:
- “It is estimated that only 4.2M BTC or 22% of the total supply of BTC is in constant circulation and available for buying and selling. In other words, 78% of the circulating supply of BTC is considered illiquid.”
In a recent study by @glassnode, it is estimated that only 4.2M BTC, or 22% of the total supply of BTC, is in constant circulation and available for buying and selling. In other words 78% of the circulating supply of BTC is considered illiquid. #Crypto https://t.co/2fzMWv1GQ1 pic.twitter.com/onbjhGBho2
— BKCoinCapital (@BKCoinCapital) December 31, 2020
- Data retrieved from Glassnode also revealed that “78% of the Bitcoin Supply is Not Liquid,” meaning the majority of Bitcoins available are not for sale and kept by many crypto investors for wealth preservation.
In addition, the crypto analytic firm calculated that a million Bitcoins (BTC) or almost $30 billion in actual prices, disappeared from the liquid supply in 2020. This process even outperformed the inflow of new Bitcoins (BTC) into the network:
- “Currently, we are at a stage in which the illiquid supply is growing more than the total circulating supply according to the report. A similar pattern presently played out again during the bullish rally of 2017.”