• Bitcoin’s supply is fixed at 21 million coins, and its blockchain provides visibility over the distribution of all coins.
• Two-thirds of the supply has not moved in a year, with half of it stagnant for over two years.
• This diminishing supply will kick up short-term volatility, leaving Bitcoin open to aggressive moves to both the upside and downside.
Bitcoin Supply Overview
Bitcoin’s supply schedule is coded into the underlying blockchain and has a fixed cap of 21 million coins. The nature of the blockchain is that while individual holders are anonymous, the distribution of all coins is available for the world to see at all times.
Long-Term Holder Accumulation
Central to many Bitcoin bulls‘ long-term thesis is the idea that long-term holders will suck up supply, leading to an inexorable price rise. Currently two-thirds of the supply has not moved in a year, with 53.6% stagnant for over two years and 39.7% remaining unmoved for 3+ years – 28.6% have been idle for 5+ years.
Supply Diminishing Impact on Price
The impact that this dwindling supply may have on prices remains unclear in the long run but it does suggest greater short-term volatility given thin order books and stablecoins fleeing exchanges which could result in aggressive moves both up and down in price depending on market sentiment.
A lot is made of institutional demand for Bitcoin as well as whether institutions are giving up on it after a turbulent 2022 which saw crypto markets crash across the board or if interest rates have softened following rate hikes over recent months.
Given Bitcoin’s fixed cap and its underlying blockchain providing visibility over coin distribution, analyzing its supply can provide valuable insights into potential future price movements based on aggregated holder behaviour – especially when looking at stagnation amongst long term holders which may indicate an upwards trend in prices due to less available liquidity driving them higher as demand increases relative to decreasing supplies held by those who have been accumulating BTC for some time now..