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Bitcoin (BTC) is being funneled into wallets belonging to illiquid entities, or network participants with limited spending history, at the highest speed in half a year, suggesting a preference for accumulation by long-term investors.
On Monday, Glassnode's illiquid supply change metric reached 147,351.58 BTC ($3.9 billion), marking the highest level since December 19. This metric compares the number of coins held by illiquid wallets on a specific date with the same day of the previous month. Furthermore, the total amount held by illiquid entities has surged to a new record high of 15,207,843 BTC, with an increase of 215,000 BTC in just the past four weeks.
Despite ongoing macroeconomic uncertainty and increased regulatory risks, the data indicates that investors maintain a positive outlook on the price prospects of Bitcoin.
The U.S. Federal Reserve decided to maintain interest rates at the same level last week, signaling a pause in the 15-month period of rate hikes. While the central bank ruled out any rate cuts for this year, it left the possibility open for future increases if necessary. This tightening policy was one of the factors contributing to the significant downturn in the crypto market last year.
In the beginning of this month, the U.S. Securities and Exchange Commission (SEC) initiated legal actions against prominent digital assets exchanges Coinbase and Binance. The lawsuits alleged that these exchanges had been offering several alternative cryptocurrencies without registering them as securities. Notably, the lawsuits did not mention bitcoin, resulting in a shift of investment away from altcoins and towards the dominant cryptocurrency in terms of market value.
Glassnode analyst James Check stated in a weekly report published on Monday that the inflow rate into illiquid wallets is strengthening the argument for a gradual and consistent accumulation. He highlighted the unprecedented balance held by illiquid entities and the declining balance on exchanges, further supporting this notion.
"Overall, the market appears to be in a period of quiet accumulation, which suggests an undercurrent of demand, despite the regulatory headwinds of late," Check added.
The monthly (30-day) net change of supply held by illiquid entities has jumped to highest since December. (Glassnode)
On May 24, the illiquid supply change indicator displayed a positive shift, indicating a resurgence in accumulation, and has experienced a significant surge since that time.
Assuming all other factors remain constant, faster accumulation leads to a reduced supply in the market and the possibility of a price increase. According to technical charts, there is a potential for a bullish market recovery as long as the crucial support level of $25,200 remains unbroken, meaning the price of bitcoin should not fall below that threshold.
At the time of writing, Bitcoin was traded at approximately $26,750, with its peak reaching above $27,150 during the Asian trading session, as reported by CoinCryptoUs data.
