Bitcoin accumulation by long-term investors is on the rise, according to blockchain analytics firm Glassnode. These investors, known as HODLers, have been actively buying up Bitcoin (BTC), contributing to market illiquidity. Glassnode’s HODLer net position change metric reveals that wallets with a history of holding coins for at least 155 days are accumulating approximately 50,000 BTC ($1.35 billion) per month. As a result, a new all-time high of over 14.859 million BTC is now held by long-term holders, which accounts for 76% of the cryptocurrency’s circulating supply.
Market Experiences Coin Dormancy
Glassnode’s latest weekly report suggests that the market is currently experiencing a sustained regime of coin dormancy. This indicates a relative weakness of supply-side pressure in the market and the potential for an exaggerated price rally. Increased coin dormancy means that coins are being held for longer periods of time in an illiquid state, making them unavailable for trading or selling.
Coin dormancy can be seen as a sign of confidence in the long-term value of Bitcoin, as investors are less inclined to sell their holdings. This trend of Bitcoin accumulation by long-term investors is expected to continue, further contributing to market illiquidity.
HODLers Vault Over 50k BTC per Month
The report also highlights that over 50,000 BTC per month are currently being vaulted by HODLers. This suggests both a tightening supply and a widespread reluctance to transact among these long-term investors. As more and more coins are held in an illiquid state, the available supply for trading decreases, which can lead to increased volatility and potentially higher prices.
This Bitcoin accumulation trend may be driven by a variety of factors, including increased institutional interest, growing recognition of Bitcoin as a store of value, and the belief that the cryptocurrency will continue to appreciate in the long term.
Impact on Market Liquidity
As Bitcoin accumulation by long-term investors continues, market liquidity is likely to be affected. With a significant portion of the circulating supply being held by HODLers, there is less Bitcoin available for trading, which can lead to increased price volatility.
However, this illiquidity may also be viewed as a positive sign for the cryptocurrency market. It indicates that a growing number of investors are committed to holding their Bitcoin for the long term, demonstrating confidence in the asset’s potential for future growth.
Conclusion
In conclusion, the ongoing Bitcoin accumulation by long-term investors is contributing to market illiquidity and a sustained regime of coin dormancy. This trend suggests that a growing number of investors are confident in the long-term value of Bitcoin and are less inclined to sell their holdings. As a result, the available supply for trading is decreasing, which can lead to increased price volatility and potentially higher prices.
It remains to be seen how this trend will impact the overall market dynamics in the long run. However, the current state of Bitcoin accumulation by HODLers indicates a strong belief in the future potential of the cryptocurrency and its role as a store of value.
