Bitcoin’s hot supply, representing coins moved or traded within the past seven days, has plunged by over 50% in three months, sparking speculation about an imminent price breakout. Data from blockchain analytics firm Glassnode shows this metric dropping from 5.9% to 2.8% of Bitcoin’s circulating supply, indicating a sharp contraction in liquid BTC available for trade. This decline suggests holders are increasingly opting to retain their assets rather than engage in short-term transactions, reflecting a shift toward accumulation strategies amid ongoing market volatility.
The reduction in active trading volume signals tightening liquidity, which could amplify price volatility if demand rebounds. Analysts interpret this trend as a bullish signal, noting that declining hot supply historically coincides with long-term holders strengthening their positions. These “strong hands” are less likely to sell during price dips, reducing downward pressure and creating conditions for potential supply shocks. Market observers highlight that sustained demand against a dwindling liquid supply could drive prices upward, particularly if institutional or retail interest rebounds.
Bitcoin’s price recently rallied to $87,443 before stabilizing near $85,256, marking a 2.22% increase over 24 hours. Trading volume remains elevated at $37.81 billion, suggesting underlying bullish sentiment despite short-term fluctuations. The cryptocurrency has struggled to break out of a narrow range over the past two weeks, but the confluence of reduced sell-side pressure and accumulation patterns hints at brewing momentum.
While the drop in hot supply underscores confidence among long-term investors, risks persist. Liquidity constraints could complicate large-scale purchases, and stagnant demand might delay a supply-driven rally. However, analysts argue that the current setup mirrors past phases preceding significant price surges, with the market poised for a breakout if macroeconomic conditions or regulatory developments favor crypto assets. As Bitcoin’s circulating supply becomes increasingly illiquid, traders and institutions are monitoring for catalysts that could reignite bullish trajectories in the weeks ahead.
Sources:
Bitcoin’s Hot Supply Drops 50% in 3 Months – Bullish or Bearish Signal?
https://www.investing.com/news/cryptocurrency-news/bitcoin-hot-supply-metric-drops-50-imminent-btc-price-breakout-3940205
