Record 74% of Bitcoin’s Circulating Supply is Now Illiquid, Indicating a Bullish Trend

Bitcoin, the world’s leading cryptocurrency, has seen a significant shift in its market dynamics. A recent report reveals that a record 74% of Bitcoin’s circulating supply is now illiquid. This development is a strong indicator of a bullish trend for Bitcoin, as it suggests a decrease in selling pressure and an increase in holding sentiment among investors. This article will delve into the implications of this trend and what it means for the future of Bitcoin.

Understanding Bitcoin’s Illiquidity

Before we delve into the implications of this trend, it’s crucial to understand what it means for Bitcoin to be ‘illiquid’. In the context of cryptocurrencies, liquidity refers to the ease with which a digital asset can be bought or sold without affecting its market price. When a significant portion of Bitcoin’s circulating supply becomes illiquid, it means that these coins are not readily available for buying or selling. This is often because investors are holding onto their coins, anticipating a future price increase.

Implications of Bitcoin’s Illiquidity

The increasing illiquidity of Bitcoin’s circulating supply has several implications:

• Decreased Selling Pressure: When more Bitcoin becomes illiquid, it means fewer coins are available for sale. This reduces selling pressure, which can help to stabilize or even increase the price of Bitcoin.
• Increased Holding Sentiment: The rise in Bitcoin’s illiquidity indicates that more investors are choosing to hold onto their coins. This suggests a strong belief in Bitcoin’s long-term value and potential for price appreciation.
• Greater Price Volatility: With fewer coins available for trading, price swings can become more pronounced. This can lead to increased volatility in Bitcoin’s price.

Case Study: Bitcoin’s Bullish Trend in 2020

A clear example of the impact of Bitcoin’s illiquidity on its price can be seen in the events of 2020. As the global economy grappled with the effects of the COVID-19 pandemic, Bitcoin’s illiquidity reached an all-time high. This coincided with a significant increase in Bitcoin’s price, which soared from around $7,