Bitcoin Faces Challenges as Illiquid Supply Hits Historical Highs

The Current State of Bitcoin: Overcoming the $100,000 Sell Wall

In recent weeks, Bitcoin (BTC) has been facing a significant hurdle: a $100,000 sell wall that seems challenging to breach. With approximately $384 million worth of Bitcoin available for sale between its current price and this crucial psychological milestone, traders and investors are keenly observing market movements.

Understanding the Illiquid Supply

An essential factor in this dynamic is the concept of illiquid supply, which refers to Bitcoin held by long-term holders (LTHs) who are not actively trading their tokens. According to data from Glassnode, the illiquid supply has seen a substantial rise, adding over 185,000 BTC in the last 30 days. This accumulation has brought the total illiquid supply to an all-time high of 14.8 million BTC, making up about 75% of the total circulating supply of just under 20 million BTC.

Investor Behavior and Market Trends

• This recent increase in illiquid supply is the second-largest 30-day change recorded this year, suggesting a shift in investor behavior towards holding rather than trading.
• CoinDesk's previous research highlights that sales by LTHs seem to be concluding, as they have continuously accumulated Bitcoin since November 26, adding over 2,000 BTC to their holdings.

This trend may signify a reduction in selling pressure among long-term holders, which could be beneficial for those looking to invest in Bitcoin.

Market Sentiment and Exchange Activity

Notably, since the onset of the latest bull run in early November, we have observed a significant trend where Bitcoin tokens are exiting exchanges at an accelerated rate. This marks a notable reversal of the previous two-year trend of relatively stable exchange levels. Such a movement is generally viewed positively, indicating a surge in investor demand.

The Road Ahead for Bitcoin Investors

The complex interplay between the sell wall, illiquid supply, and changes in exchange activities presents an intriguing scenario for Bitcoin investors. While the immediate sell wall at $100,000 presents challenges, the underlying data suggests a growing confidence among long-term holders.

Key Takeaways

1. Bitcoin's $100,000 sell wall is substantial, with $384 million in sell orders.
2. Illiquid supply is at an all-time high, indicating increased holding by LTHs.
3. Long-term holders appear to be reducing sell pressure, potentially stabilizing the market.
4. Rapid exit of Bitcoin from exchanges signifies rising investor demand.

As the cryptocurrency landscape continues to evolve, investors should keep an eye on these trends to make informed decisions.