- BTC’s illiquid supply has continuously increased in Q2 2023, revealing an antithetical relationship with price.
- BTC’s latest pump to 30k caused a dramatic shift in investors’ sentiment.
Bitcoin’s [BTC] sluggish growth over the past month coupled with legal actions against top exchanges, significantly reduced investors’ appetite for trading. As FUD engulfed the market, most long-term investors started to take coins out of exchanges in favor of self-custody.
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As per the on-chain analytics firm Glassnode, a fascinating divergence came to light between supply on exchanges (i.e, liquid supply) and supply held in illiquid wallets with no history of spending. While the exchange balance dropped to 2.3 million, the lowest since early 2018, the illiquid supply reached a fresh all-time high of 15.2 million.
, Source: Glassnode
BTC available for trading falls
BTC’s illiquid supply has continuously increased in Q2 2023, as shown below, revealing an inversely proportional relationship with BTC’s price. It was interesting to note that the illiquid supply equated to more than 78% of BTC’s total circulating supply, indicating a marked rise in HODLing sentiment.
Source: Glassnode
This trend could be explained by the fact that Bitcoin was increasingly viewed as a ‘Store of Value’ rather than a speculative asset in intraday trading, lending credence to its long-held narrative of being a safe-haven asset.
Will the sentiment change?
After extended periods of rangebound price movement, BTC breached the $30,000 mark at press time, the first time since mid-April, as per CoinMarketCap. According to blockchain analytics firm Santiment, this caused a dramatic shift in investors’ behavior as BTC whales woke up from slumber to clock their highest transaction count in over three months.
🐳 #Bitcoin‘s whale transactions hit its highest hour in over 3 months, as 259 transactions exceeding $1M in value occurred on the $BTC network just 2 hours after its price exceeded $30.6k. Volume likely needs to continue rising to justify more growth. https://t.co/N5jkXCws6R pic.twitter.com/DrFo4avE0a
— Santiment (@santimentfeed) June 21, 2023
Investor sentiment for the king coin also turned to greed for the first time since May. The market mood has been neutral in recent weeks due to low volatility, which disappointed both bullish and bearish forces.
Bitcoin Fear and Greed Index is 65. Greed
Current price: $30,038 pic.twitter.com/z8bSUXetNQ— Bitcoin Fear and Greed Index (@BitcoinFear) June 22, 2023
How much are 1,10,100 BTCs worth today?
Endorsement from the central bank?
The recent admission by Federal Reserve Chair Jerome Powell that BTC and the crypto asset class “appear to have some staying power” spurred the price increase.
Powell made the remarks during a hearing on monetary policy by the House Financial Services Committee. The Chairperson also said, “We do see payment stablecoins as a form of money”.
