Bitcoin's Illiquid Supply Reaches All-Time High, Signaling Long-Term Holder Dominance

The Bitcoin (BTC) network is experiencing a pivotal shift as over 72% of its circulating supply is now classified as illiquid. This marks a significant reduction in sell-side pressure on exchanges and reflects the growing influence of long-term holders in shaping the cryptocurrency’s supply dynamics.

Illiquid Bitcoin Supply Hits Record 14.3 Million BTC

Recent data from Glassnode highlights that Bitcoin’s illiquid supply has soared to an all-time high of 14.3 million BTC as of October 19. "Illiquid supply" describes Bitcoin held long-term in wallets with minimal transaction activity. Since the start of 2023, there has been an impressive increase of over 422,430 BTC held in addresses that haven't moved their funds for at least seven years.

Out of the total circulating supply of approximately 19.92 million BTC, over 72% is now deemed illiquid. This trend showcases a dwindling availability of Bitcoin for immediate sale, as more investors adopt a "HODL" mentality. These holding patterns suggest a long-term bullish sentiment, reflecting confidence in Bitcoin’s enduring value proposition.

Institutions and Long-Term Holders Eye 6 Million BTC by 2025

Future supply contraction is expected to deepen as both institutional investors and long-term holders continue to amass Bitcoin. According to global asset management giant Fidelity, their projections indicate these groups could collectively lock up over 6 million BTC by 2025. This represents a substantial 28% of Bitcoin’s fixed supply cap of 21 million.

Fidelity’s data further reveals a consistent quarterly increase in Bitcoin held by long-term investors since as far back as 2016. Publicly traded companies, particularly those holding over 1,000 BTC, have demonstrated a similar pattern. Their accumulation rate has accelerated since 2020, underscoring the growing integration of Bitcoin as a strategic asset.

From January 1 to September 2023, corporate and exchange-traded fund (ETF) issuers collectively increased their Bitcoin reserves from 2.24 million BTC to 2.88 million BTC—a 30% growth within nine months. This surge underscores the rising role of institutions and corporations, signifying a structural transformation in Bitcoin’s demand landscape.

Whales and Sharks Absorbing Bitcoin Faster Than It Is Mined

Glassnode data further reveals that "whales" (wallets holding over 1,000 BTC) and "sharks" (wallets with 100–1,000 BTC) are acquiring Bitcoin at an extraordinary pace. Together, these entities are absorbing Bitcoin at a rate equivalent to 300% of the current supply from miners, setting an unprecedented accumulation milestone in the asset's history.

This rapid acquisition by large investors has significantly impacted exchange reserves. The net annual BTC inflow rate to exchanges has plummeted below -150%, a clear indication that Bitcoin is leaving trading platforms en masse. This movement suggests that investors are favoring self-custody solutions or adopting long-term holding strategies, further reducing liquidity in the market.

Institutional Adoption Fuels Growing Scarcity

The rapid adoption of Bitcoin by traditional financial systems, the emergence of corporate treasury strategies, and increasing demand for Bitcoin-backed ETFs are all contributing to a shrinking pool of active supply. These factors collectively advance a bullish narrative among investors and analysts.

As a larger share of Bitcoin’s circulating supply transitions to "illiquid" status—unlikely to re-enter markets—future spikes in demand could dramatically influence prices. This phenomenon, known as price elasticity, underscores Bitcoin's evolution into a scarcity-driven asset. Simultaneously, this growing scarcity highlights its potential as both a strategic reserve for institutional entities and a store of value for long-term individual holders.

Conclusion: Bitcoin’s Future Shaped by Supply Dynamics

Bitcoin’s current trajectory signals a critical turning point in its adoption and market behavior. With a record 14.3 million BTC classified as illiquid, the supply-side landscape is increasingly defined by long-term holders, institutions, and large-scale investors. These structural shifts position Bitcoin as a strategic, finite asset poised for increasing value due to scarcity-driven dynamics.

As more of Bitcoin’s supply is locked out of circulation, its role as "digital gold" becomes further cemented. Whether through institutional treasury strategies, self-custody trends, or demand for Bitcoin ETFs, these forces collectively pave the way for profound implications in the cryptocurrency market. The ongoing reduction in available supply suggests that Bitcoin’s long-term price trajectory remains firmly aligned with its principles of decentralization, scarcity, and resilience.