270K moved Bitcoin for storage in a month

Despite surge prices, Bitcoin investors are quickly locking up their BTC in the long run, with 270,000 BTC being pulled out of the liquid supply in the last 30 days.

According to data published by crypto market data aggregator Glassnode, “liquid” Bitcoin wallets have shed 270,000 BTC over the past month, up from 175,000 Bitcoin at the beginning of January.

Change Bitcoin Monthly Liquid Supply. Source: Glassnode

The data shows that Bitcoin’s liquid supply (BTC) has fallen steadily over the past nine months, with current liquid supply at 21.3% and showing no signs of reversing.

Bitcoin’s increasingly illiquid supply could be bullish for its price, with new retail and institutional traders competing for increasing supply. Glassnode estimates that nearly 80% of the 18.6 million circulating Bitcoin is currently stored in “illiquid” wallets.

According to Glassnode, a Bitcoin wallet is considered illiquid if less than 25% of the received Bitcoin has been transferred out over the life of the entity. In contrast, to be considered highly liquid, the majority of Bitcoin must be transferred back into circulation, with less than 25% of the inflows being captured.

Bitcoin liquidity supply. Source: Glassnode

Of the 3.9 million that BTC Glassnode describes as highly liquid, 61% or 2.38 million is held by central exchanges. Their balances have also been falling, with data from analytics firm CryptoQuant indicating that exchange reserves have shrunk by 13.8% since July.

Increasing institutional investment can be a significant driving force for Bitcoin liquid supply depletion, with the wallet tracking service Bitcoin Treasuries currently estimates that 33 institutional entities have accumulated more than 1.2 million BTC or 6.5% of Bitcoin’s circulating supply .

In the past few days, Grayscale has increased its holdings by approximately 25,000 BTC with a portfolio of 641,523.7 BTC as of January 20, 2021. To put this into perspective, approximately 900 Bitcoin are mined daily. According to Glassnode, however, on average only one-third of those sent to exchanges since July 2020.

Data from SwissBorg Investment Company shows that, in the second half of 2020, institutional investors bought on average more than 230% of the newly brewed BTC. Adding in the purchases from PayPal and Square (plus the estimated daily loss of Bitcoin) demand could be running as high as 500% of the new supply.

Earlier today, the world’s largest asset manager BlackRock filed with the SEC, listing Bitcoin Derivatives as a potential investment. The company entered 2021 with $ 7.81 trillion in assets under management, more than seven times the entire crypto market cap.