Bitcoin stands out as a deflationary asset in the realm of cryptocurrencies due to its fixed supply. Unlike Ethereum, whose supply can fluctuate annually based on network activity, Bitcoin’s total supply is capped at 21 million coins. Notably, over 4 million of these coins are deemed irrecoverable, adding to the scarcity of this digital asset.
Decreasing Willingness to Sell Among Bitcoin Holders
Recent analysis of on-chain data reveals a significant decline in the number of Bitcoin holders willing to sell their holdings. As of October 2024, less than 10% of Bitcoin holders are inclined to part with their coins. This figure marks a substantial drop from the 26% observed in mid-2021 and the 64% in 2013. This trend underscores a growing confidence among both long-term and short-term holders in Bitcoin’s value proposition.
Long-term holders are those who have held their Bitcoin for over six months, while short-term holders have acquired their coins within the last 155 days. Despite Bitcoin’s inherent volatility and its history of experiencing sharp price fluctuations, these holders exhibit a tendency to retain their assets, suggesting optimism about Bitcoin’s future prospects.
A Look at Bitcoin’s Price Movements
To contextualize this trend, it’s noteworthy that Bitcoin’s price is currently down 15% from its peak in March 2024. However, it has demonstrated a remarkable recovery, appreciating by nearly 150% year-to-date from approximately $27,000 in October 2023. This rebound follows a tumultuous period in 2022 when Bitcoin’s price plummeted below $16,000, after reaching an all-time high of nearly $70,000 in November 2021.
The cyclical nature of Bitcoin’s market does not deter traders, who often sell during price downturns. This evolving trend signifies a growing belief in Bitcoin’s long-term potential as a store of value and a hedge against economic uncertainties.
Institutional Interest and the Emergence of Bitcoin ETFs
One of the driving forces behind the reduced willingness to sell Bitcoin is the increasing engagement from institutional investors. The approval of the first spot Bitcoin Exchange-Traded Funds (ETFs) in the United States earlier this year has played a pivotal role in this trend.
According to Soso Value, issuers of spot Bitcoin ETFs in the U.S. collectively manage over $57 billion worth of BTC. Notably, BlackRock oversees more than $21.5 billion of user assets, while Grayscale has experienced over $20 billion in outflows since the introduction of its derivative product in January.
Options Trading Dynamics in the Bitcoin Market
Adam Back, CEO of Blockstream, notes the absence of options–both call and put–with durations exceeding a year. This reflects the reluctance of options traders to sell their calls, as such offerings are swiftly snapped up by eager buyers. This phenomenon further highlights the sustained interest and demand for Bitcoin-related financial products.
As Bitcoin continues to evolve within the financial landscape, its fixed supply, coupled with increasing institutional interest and the introduction of innovative financial instruments, positions it as a compelling asset with significant long-term potential.
