Bitcoin’s recent rally to a 2023 high is backed by on-chain and sentiment data.
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Data from Glassnode suggests that Bitcoin (BTC) is in an accumulation pattern, with its available supply reaching a new historical low. According to the report, Bitcoin’s illiquid supply and long-term holders are increasing.
As its supply tightens, available BTC is being purchased by smaller, long-term holding entities.
Bitcoin accumulation among a majority of investor cohorts and the bullish conviction of long-term holders have resulted in investors gobbling up “92% of the newly mined supply,” according to the Glassnode analysis.
“If we isolate only entities on the smaller end of the scale, such as Shrimps (
Entity Bitcoin balance changes versus issuance. Source: Glassnode
On the backs of smaller entities accumulating Bitcoin’s minted supply, long-term holders have reached new highs versus short-term holders, something not seen since July 2023. In addition to the solid long-term holder ratio, the short-term holder supply diminished to all-time lows.
Long-term versus short-term Bitcoin holder ratio. Source: Glassnode
The combined effect is creating a tightening of the BTC supply available for purchase, which is possibly helping to keep Bitcoin’s price above $34,000 and providing strong support above $30,000.
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In comments to Cointelegraph, LMAX Group market strategistJoel Kruger explained how a Bitcoin price breakout to $40,000 could occur:
“We don’t see anything specific going on with the price of Bitcoin to start the week other than the usual run of steady demand from medium- and longer-term players looking to build exposure. If anything, Bitcoin has actually been more contained of late relative to currencies and risk assets, which have been in notable rally mode on expectations for a more accommodative shift in Fed policy in the aftermath of a run of softer U.S. economic data. Technically speaking, it would take a break above $36,000 to really turn heads and trigger the next wave of bullish momentum.”
Illiquid coins, given Bitcoin’s finite supply, are typically a bullish market indicator. The illiquid Bitcoin supply continues on pace for monthly inflows for another year. The net increase of illiquid Bitcoin is 71,000 BTC per month.
Bitcoin illiquid supply change. Source: Glassnode
Related: Exchange flow gap hits 10K BTC — 5 things to know in Bitcoin this week
The growing confidence in Bitcoin amid the tightening supply is not limited only to smaller entities. Nearly all cohorts are increasing their Bitcoin holdings year-to-date, an action that is well illustrated by the chart below.
Bitcoin accumulation across all cohorts. Source: Glassnode
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
