Bitcoin Supply Shock: 57% of BTC Hasn’t Moved in Two Years

A bitcoin supply shock may be brewing, as on-chain data shows that 57% of bitcoin has yet to see any movement since at least two years ago.

Bitcoin Supply Hits Record High Since Dormant for More Than Two Years

As Charles Edwards, founder of Capriole Investments, pointed out in a post on X, the supply of BTC, which has been dormant since at least two years ago, has recently hit consecutive all-time highs (ATH).

Investors holding Bitcoin provide this old composition to the broader group of “long term holders” (LTH), which are investors who have held tokens since at least 155 days ago.

It is a statistical fact that the longer a holder keeps their tokens on the blockchain, the less likely they are to transfer them at any time. Because of this, LTH is considered the more stubborn side of the BTC market.

The 2+ year segment would include investors who are the most committed diamond hands even amongst these HODLers, as they have held for well over 155 days.

Now, the chart below shows the trend of the percentage of total bitcoin in circulation held by this portion of LTH over the history of the cryptocurrency:

The value of this indicator seems to have been rising in recent days | Source: @caprioleio on X  Kaspa mining

As the chart above shows, the supply of these LTH holdings has been trending upwards since the FTX crash and continues to set new ATH.

Recently, the growth of this metric has slowed, but it is still rising. Currently, about 57% of the Bitcoin supply is locked in the hands of these HODLers.

Edwards noted that this is creating a huge supply crunch in cryptocurrency. The quantitative analyst also noted that a similar trend (marked with a green line in the chart) has been seen in the lead-up to all past bull markets.

Earlier today, the U.S. SEC gave final approval to the Bitcoin Spot ETF, which Edwards explains could lead to a supply shock that will only get worse, as “the ETF is only authorized for cash subscriptions (not physical). As a result, each purchase takes more bitcoin off the market.”

Chart analyst James V. Straten says this may also provide another angle on the supply shock brewing for the asset.

Looks like the value of the indicator has been falling for some time now | Source: @jimmyvs24 on X

The chart above shows data on the percentage of bitcoin supply in wallets on centralized exchanges. This metric has been declining over the past few days, with only 12% of BTC now stored on these platforms.

Exchange supply is significantly more likely to be involved in buying and selling activity (as this is naturally what these platforms are used for), so the decline means that the effective trading supply of the asset is also decreasing.

Bitcoin Price

At the time of writing, Bitcoin is trading at around $45,900, up over 4% from last week.  Antminer

Coin price has been on a roller coaster ride over the past day | Source: BTCUSD on TradingView