Bitcoin‘s illiquid supply equated to more than 78% of BTC’s total circulating supply, indicating a marked rise in HODLing sentiment.
As per the on-chain analytics firm Glassnode, a fascinating divergence came to light between supply on exchanges (i.e, liquid supply) and supply held in illiquid wallets with no history of spending. While the exchange balance dropped to 2.3 million, the lowest since early 2018, the illiquid supply reached a fresh all-time high of 15.2 million.
Source: Glassnode
BTC available for trading falls
BTC‘s illiquid supply has continuously increased in Q2 2023, as shown below, revealing an inversely proportional relationship with BTC’s price. It was interesting to note that the illiquid supply equated to more than 78% of BTCs total circulating supply, indicating a marked rise in HODLing sentiment.
Source: Glassnode
This trend could be explained by the fact that Bitcoin was increasingly viewed as a ‘Store of Value’ rather than a speculative asset in intraday trading, lending credence to its long-held narrative of being a safe-haven asset.
Will the sentiment change？
After extended periods of rangebound price movement, BTC breached the $30,000 mark at press time, the first time since mid-April, as per CoinMarketCap. According to blockchain analytics firm Santiment, this caused a dramatic shift in investors behavior as BTC whales woke up from slumber to clock their highest transaction count in over three months.
Investor sentiment for the king coin also turned to greed for the first time since May. The market mood has been neutral in recent weeks due to low volatility, which disappointed both bullish and bearish forces.
Endorsement from the central bank？
The recent admission by Federal Reserve Chair Jerome Powell that BTC and the crypto asset class “appear to have some staying power” spurred the price increase.
Powell made the remarks during a hearing on monetary policy by the House Financial Services Committee. The Chairperson also said, “We do see payment stablecoins as a form of money”.