A new on-chain report from Glassnode indicates that most of the Bitcoin (BTC) supply is currently illiquid, regardless of market volatility and the largest cryptocurrency’s bearish performance in recent weeks.
Bitcoin Illiquid Supply Spikes
Earlier Monday, Glassnode reported that the illiquid supply of Bitcoin has increased this week, according to the Illiquid Supply Shock Index (ISSR) created by Will Clemente, the current Principal Insights Analyst at Blockware Solutions.
Illiquid supply accounts for coins that have little or no spending history and can sometimes be attributed to long-term holders. The Bitcoin Illid supply index has increased to 3.2x, which is higher than the supply of Liquid and Highly Liquid combined, according to Glassnode.
Additionally, it was reported that around 54,000 BTC was withdrawn from crypto exchanges in nine days, which coincides with the decline in the liquid supply of Bitcoin.
Perhaps an increase in the liquid supply means a decrease in the liquid supply; therefore, fewer coins should be available to meet demand. This can be considered a potentially bullish indication for Bitcoin; however, the current state of the leading cryptocurrency does not correlate.
Less demand for BTC
While the price can go either way, data from ISSR confirms that the amount of Bitcoin available to buy is declining, painting a bullish picture for the cryptocurrency based on the economics of scarcity. However, this only matters, especially if people are becoming more willing to buy (demand). At the moment, there does not seem to be a new demand for Bitcoin.
The absence of market demand plausibly explains why the Bitcoin price currently shows no correlation with on-chain data.
BTC price update
BTC was trading at $38,748 with a market capitalization of $739.37 billion at the time of writing. Since hitting an all-time high of $68,789 in November 2021, Bitcoin is down over 40%. For the past 30 days, BTC has been struggling to recapture the $45,000 mark.