Bitcoin Supply Shrinks as Holders Refuse to Sell

Recent on-chain data reveals that about 75% of all Bitcoin in circulation has stayed untouched for over six months.

Glassnode’s hodl wave chart, which analyzes blockchain activity, indicates that nearly three-quarters of Bitcoin has remained in wallets throughout 2024, even though the cryptocurrency’s value has dropped by 21% from its highest point.

This trend suggests that many long-term investors are holding onto their Bitcoin, likely expecting future price increases.

Such behavior reduces the amount of Bitcoin available for trading, potentially driving prices up as demand grows and supply diminishes.

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In a recent analysis, James Check noted that over 80% of short-term Bitcoin holders are experiencing losses, having bought their Bitcoin at higher prices. This situation could lead to further selling if these investors decide to cut their losses, mirroring patterns seen in previous years.

Right now, over 80% of #Bitcoin Short-Term Holders are underwater, meaning their coin was acquired at a price above the current spot price.

This is similar to 2018, 2019, and mid-2021 which signalled many investors were at risk of panicking, and precipitating a bearish trend. pic.twitter.com/8jM7PBqh5z

— _Checkmate 🟠🔑⚡☢️🛢️ (@_Checkmatey_) August 19, 2024

Market sentiment continues to be pessimistic, with the Crypto Fear & Greed Index showing a score of 28, indicating significant fear, levels not seen since December 2022.

Alexander Stefanov