There is now less liquid Bitcoin to buy than at the ‘lowest generation’ of 2018

Disclaimer: This article contains Technical Analysis, which is a methodology to forecast price direction through the study of past market data, mainly price and volume. The content presented in this article is the opinion of the author. None of the information you read on CryptoSlate should be taken as investment advice. Buying and trading cryptocurrencies should be considered a high risk activity. Please exercise due diligence and consult a financial advisor before making any investment decisions.

According to the latest data from crypto analysis firm Glassnode, there is currently less Bitcoin in a very liquid state than there was at the low of the infamous December 2018 surrender.

A deeper dive into the numbers shows that it is incredibly bullish not only for Bitcoin, but also for the rest of the market, as it shows that there is less BTC to buy, despite the massive drop in prices.

Bitcoin’s illiquid supply matters more than its price

When the whole market turns red, it makes sense to conclude that the demand to sell is also increasing. However, the inherent transparency provided by blockchain technology allows us to analyze the movement of cryptocurrencies and determine whether or not they are trading hands as much as the price charts might indicate.

Selling pressure is easy to spot, as it always correlates with a huge influx of funds into cryptocurrency exchanges. The amount of cryptocurrencies held in cryptocurrencies is their “cash supply” and indicates how many of them are available for purchase. When cryptocurrencies are kept away from trading, they are generally not available for trade and have the potential to create a tight supply when demand is high.

This appears to be the case with Bitcoin, which has seen its price cut by more than 10% over the past week.

The latest chain analyzes from Glassnode indicate that the illiquid supply of Bitcoin, that is, the number of coins with a low probability of being spent, is at an all time high. There are currently over 14.43 million BTC stuck on exchanges, according to the data.

Illiquid Bitcoin Supply
Graph showing the supply of Bitcoin with a low probability of being spent (Source: Glassnode)

Bitcoins with a moderate probability of being spent have also matured steadily. Glassnode’s research has shown that tokens have shown a tendency for macro maturation and will soon fall into the “low probability to spend” category.

Bitcoin's cash supply
Graph showing the supply of Bitcoin with a moderate probability of being spent (Source: Glassnode)

The number of bitcoin with the highest probability of being spent, which includes newly purchased coins and coins held on the stock exchange, has hit its multi-year low. Bitcoin’s highly liquid supply currently stands at 3.13 million BTC, which is lower than in December 2018, when the market experienced its infamous surrender.

Bitcoin's highly liquid supply
Graph showing the supply of Bitcoin with a high probability of being spent (Source: Glassnode)

The steady decrease in the number of bitcoins available on the exchanges also correlates with the popular Stock-to-Flow (S2F) model, which predicts that the price of BTC will continue to rise after each halving event due to increased demand and reduced supply.

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