Inactive Bitcoin Stays Firmly Planted at 70% of Supply

Bitcoin investors demonstrate extreme HODL’ing even as the coin’s price recorded a new yearly high.

Guy looking at crypto chart data.
Created by Kornelija Poderskytė from DailyCoin
  • Bitcoin investors demonstrate extreme HODL’ing.
  • Over 70% of the circulating Bitcoin supply remains inactive for over a year.
  • Extreme HODL’ing increased as the Bitcoin price began moving higher.

HODL’ing conveys that a particular coin or token has a sustainable future. Bitcoin investors have taken this commitment to the extreme as data shows that more than 70% of the circulating BTC supply hasn’t moved in more than a year, demonstrating rock-solid conviction in the protocol.

Bitcoin Supply Is Mostly Inactive

The Bitcoin supply, inactive for over a year, began trending higher in late 2021, per Glassnode data. After declining to a low of around 52% in December 2021, the percentage of dormant BTC began increasing rapidly until May 2022. A relative lull followed as the investors digested the impact of the Terra LUNA implosion

Even so, inactive Bitcoin for over one year continued to climb, albeit slower than pre-May 2022. This trend reversed over the summer, but a sharp uptick by November took the on-chain metric to 70.3% just as Bitcoin was winding up to hit a new yearly high in early December.


Chart of inactive Bitcoin supply per Glassnode.
Inactive Bitcoin supply per Glassnode.

Glassnode’s “BTC: Supply Last Active 1yr+ Age Bands” metric tracks the longevity of Bitcoin in investor wallets. This metric rises as coins get accumulated by long-term holders. Conservely, as holders spend or move their BTC, the metric declines accordingly. Currently, we’re seeing the former occur, with the lion’s share of supply being HODL’ed by investors with a multi-year time frame.

This pronounced pattern of HODL’ing signals enduring confidence in Bitcoin’s long-term investment thesis despite enduring bear market challenges, which seem to be subsiding as 2023 draws to a close.

Bull Market Here?

Bitcoin’s recent strong run of form has been largely attributed to expectations of a regulatory nod to the flood of spot BTC ETF applications, which has driven the narrative on a subsiding bear market.

The leading cryptocurrency began increasing in mid-October, rising from $26,900 to a yearly high of $45,000 by December 5. However, momentum stalled after a violent sell-off triggered a sharp fall to $40,000 on December 11. Bitcoin has since been caught in a tight range, trading between $40,500 and $42,000.

Chart showing the dollar price of Bitcoin on a daily time frame per Trading View.
BTCUSD daily chart per Trading View. 

On the Flipside

  • Despite stalling price action, 2024 is still predicted to be a bullish catalyst for Bitcoin as the halving nears.
  • Critics argue that lower liquidity from inactive coins inhibits Bitcoin‘s use as a medium of exchange.
  • US Senator Elizabeth Warren recently proposed a bill to crack down on crypto‘s use in illicit activity, including extending KYC requirements to private crypto wallets.

Why This Matters

Bitcoin investors have demonstrated stoic conviction by resolutely HODLing through bear market lows. These supply dynamics affirm Bitcoin’s endurance as true believers refused to flinch even amid the most testing times. 

Learn more about rising expectations of altseason as Bitcoin falters here:
Altcoins Poised to Explode as Bitcoin Dominance Wanes?

Read about Donald Trump’s latest “Mugshot Edition” NFT series here:
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This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Samuel Wan

Samuel Wan is a finance professional turned crypto journalist, known for his insightful reporting on market trends, regulatory changes, and technological developments within the digital asset industry. His ability to simplify complex concepts and report the facts has made him a trusted source in the crypto community. Beyond his writing, Samuel is an active mountain biker and gamer.