Bitcoin Liquidity Shrinks

The illiquid supply is charting new territories, reaching a peak of 15.3M BTC, indicating an expanding group of investors dedicated to their Bitcoin long-term holdings.

This downward trajectory denotes a possible alteration in market practices, with many participants adopting long-term holding tactics, contributing to the illiquid entities.

Also, there has been a dip in the highly liquid supply over the previous three years, decreasing from 3.7M BTC in March 2020 to just 2.9M BTC.

This downward trend might represent a dwindling number of active traders or groups frequently engaging in Bitcoin transactions.

These changes suggest a tightening in Bitcoin's available supply. The increasing number of Bitcoins in illiquid assets, coupled with the diminishing liquid and highly liquid supplies, sets the stage for a 'short squeeze' situation.

This scenario unfolds when the scarce active supply in the market fails to meet the trading demand, leading to abrupt price surges...