Bitcoin’s active supply, referring to coins transacted within the past week, has plunged by over 50% in three months, falling from 5.9% to 2.8% of circulating supply. Data from Glassnode highlights this contraction, signaling a reduction in liquid Bitcoin available for trading as holders increasingly adopt long-term accumulation strategies. Analysts interpret this trend as a potential precursor to a supply squeeze, particularly if demand rebounds or remains stable.
The decline aligns with reduced inflows to exchanges, which dropped 54% from 58,600 BTC daily to 26,900 BTC over the same period. Spot Bitcoin ETFs also faced significant outflows in recent weeks, though three consecutive days of inflows this week suggest cautious optimism returning. Meanwhile, the U.S. government’s reported interest in increasing Bitcoin acquisitions and dwindling exchange reserves—now at 2.1 million BTC, down from 2.2 million—add to supply-side pressures.
Market dynamics reveal tightening liquidity, with fewer coins accessible for large purchases. This scarcity could amplify upward price momentum during demand surges. Bitcoin’s price briefly touched $87,443 this week before stabilizing near $85,256, reflecting a 2.22% uptick amid fluctuating trading volumes. Traders speculate the lack of active supply between $70,000 and $80,000, a range bypassed during November’s rapid price rally, leaves minimal support levels, increasing volatility risks.
Glassnode analysts note stronger accumulation by long-term holders, who now control over 54% of inactive supply held for two years or more. This “HODLing” behavior reduces sell-side pressure and stabilizes the market. With exchange reserves hitting multi-year lows and macroeconomic factors like institutional ETF activity in play, market participants anticipate a breakout as supply constraints collide with potential demand catalysts.
Sources:
Bitcoin’s Hot Supply Drops 50% in 3 Months – Bullish or Bearish Signal?
https://blockchain.news/flashnews/u-s-bitcoin-acquisition-and-exchange-supply-decline-signal-potential-supply-shock
https://www.investing.com/news/cryptocurrency-news/bitcoin-hot-supply-metric-drops-50-imminent-btc-price-breakout-3940205
https://www.mitrade.com/insights/news/live-news/article-3-687206-20250310
