Leading crypto exchange Bitfinex released its latest Bitfinex Alpha report, a weekly publication that offers on-chain data and insights into the dynamic crypto market. This week’s document found that the amount of unmoved bitcoin has reached its highest point.

The report further highlights an intriguing development in liquidity trends. Bitcoin liquidity has experienced a decrease, while that of Tether USDT has witnessed a noteworthy increase.

Bitcoin’s Unmoved Supply Hits ATH

Bitfinex Alpha attributes the surge in unmoved bitcoin to the growing interest of institutional investors in the digital asset.

Citing data from Ark Invest, an investment firm headed by the renowned Cathie Wood, the paper stated that about 70% of BTC’s circulating supply has been unmoved for at least a year, the highest ever recorded.

The increasing involvement of these big players indicates strong bullish sentiment and unwavering confidence in bitcoin’s long-term prospects.

According to the report, the BTC balance held on over-the-counter (OTC) desks, which serves as a reliable indicator of institutional activity, reached a one-year high in June. The balance surged by an impressive 60% by the end of the third quarter. This growth suggests that institutions and large investors are actively embracing the cryptocurrency as an attractive investment option.

The researchers also found that the bitcoin holdings of crypto-related hedge funds, investment firms, and private funds have significantly increased as institutional investors accumulate BTC at the current price level.

Derivatives Traders Dominating the Market

However, per the report, there has been a notable surge in Bitcoin Open Interest, exceeding a substantial 38% increase since the initial spot Bitcoin ETF filing by the world’s largest asset manager BlackRock.

This rise indicates a potential shift in market dynamics, with derivatives traders potentially exerting greater influence on the current momentum, dethroning spot traders.

Bitfinex researchers caution that increased positions in futures contracts typically indicate short-term downward pressure on BTC’s price. As such, traders should monitor the trend closely, as it could impact market performance in the short run.

A Decreased Bitcoin Liquidity

The report also found that there has been a decline in bitcoin’s liquidity, contrasted with a substantial increase in the liquidity of Tether USDT, the largest stablecoin in the market. The decreased BTC liquidity aligns with the trend of long-term bitcoin holdings, as outlined in the publication.

The researchers shed light on the development, stating:

"As more investors hold onto their Bitcoin, less of it is available for trading, leading to decreased liquidity. This trend of ‘HODLing’ is often perceived as a testament to the confidence placed in Bitcoin’s long-term value, despite temporary market fluctuations.”

However, it is worth noting that insufficient liquidity can give rise to increased price volatility. When less BTC is available for trading, price changes can become more drastic, which may pose risks for traders.

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