According to data from Glassnode, Bitcoin (BTC) is currently exhibiting an accumulation pattern as its available supply reaches a new historical low. The report indicates that Bitcoin’s illiquid supply is increasing, and long-term holders are on the rise.
The tightening supply of Bitcoin is leading to increased accumulation by smaller entities with a long-term holding strategy. In fact, the analysis from Glassnode suggests that these entities have acquired more than 92% of the newly mined supply of Bitcoin.
The data also reveals that smaller entities such as those holding less than 1 BTC, 1-10 BTC, and 10-100 BTC are playing a significant role in the accumulation pattern. Their combined rate of balance increase is equivalent to 92% of the newly mined supply, and this trend has been consistent since May 2022.
In addition to the accumulation by smaller entities, long-term holders of Bitcoin have reached new highs compared to short-term holders, a trend not seen since July 2023. Conversely, the supply held by short-term holders has decreased to all-time lows.
The combined effect of these trends is creating a scarcity in the supply of BTC available for purchase, which may be contributing to Bitcoin’s ability to maintain its price above $34,000 and strong support above $30,000.
Market strategist Joel Kruger of LMAX Group explained that a breakout in the price of Bitcoin to $40,000 could occur due to steady demand from medium- and longer-term players. He mentioned that a break above $36,000 could trigger the next wave of bullish momentum for Bitcoin.
The data also indicates that the illiquid supply of Bitcoin, which is typically a bullish market indicator, continues to show monthly inflows. The net increase of illiquid Bitcoin is approximately 71,000 BTC per month.
Furthermore, the confidence in Bitcoin’s future amid the tightening supply is not limited to smaller entities. The data shows that nearly all investor cohorts are increasing their Bitcoin holdings year-to-date.
In summary, the data from Glassnode suggests that Bitcoin is currently in an accumulation pattern, driven by increased activity from smaller entities and long-term holders. This trend is leading to a scarcity in the available supply of BTC, which is contributing to its price stability and providing strong support levels.
It’s important to note that this article does not contain investment advice, and readers should conduct their own research before making any investment decisions.