Key Takeaways
- Long-term holders continue to sit on their Bitcoin stashes
- Two-thirds of the supply has not changed hands in the last year, despite rampant volatility and a collapse of the Bitcoin price
- Over half the supply has not moved in 2 years or longer
“Supply squeeze” is a seductive phrase thrown around among Bitcoin enthusiasts.
It refers to the predicted propelling upwards of the Bitcoin supply as a result of the supply cap – there will only ever be 21 million bitcoins – and a constant increase in demand.
Whether this comes to fruition remains to be seen. But there does appear to be a growing cohort of Bitcoin investors who are holding. In fact, over two-thirds of the entire supply has not moved in over a year, an all-time high.
To be precise, 67.9% of the Bitcoin supply has not moved in over a year. That is extremely high, especially when considering the last year have brought its fair share of scandals, including the respective crashes triggered by LUNA, Celsius and FTX.
Combining these scandals with the most rapid monetary tightening in the wider economy, which have seen interest rates rise from near-zero to close to 5%, and the crypto market has been pillaged.
Looking at the price action over the last 12 months, Bitcoin has fallen from $41,000 to $15,000 and is now trading at $28,000, with more than its fair share of ups and downs in between. And yet, two-thirds of the supply has been stagnant.
Branching further out, over half the supply has now not moved in two years, close to 40% hasn’t moved in three years, while 28% has been stationary for 5 years.
Of course, lost coins will be included in all these statistics. Bitcoin has been around since 2009, and that means people have died, and with them access to their coins has vanished.
There are also simple cases of lost keys, people still roaming the Earth but with no access to their wallets. Let us not forget that Bitcoin was just a niche Internet plaything not so long ago, trading for less than $1 per coin.
Not to mention, Satoshi Nakamoto’s mammoth stash of an estimated 1 million coins, or over 5% of the entire supply, remains untouched and included in the above stats.
So make of it what you will, but Bitcoin still remains quite an illiquid market and with a dwindling supply, it is easy to see the narrative pushed by enthusiasts that if demand continues to rise, the price will only go upward.
Of course, whether that demand will indeed continue to rise is another question entirely, and a much harder one to answer.
