Bitcoin (BTC) is increasingly finding its way into wallets controlled by illiquid entities, or network participants with little-to-no spending history, at the fastest rate in six months. This indicates a bias for accumulation by long-term investors. According to Glassnode’s illiquid supply change metric, this measure reached 147,351.58 BTC ($3.9 billion) on Monday, marking the highest level since Dec. 19. The total bitcoins held by illiquid entities has now reached a record high of 15,207,843 BTC, with an increase of 215,000 BTC in the past four weeks alone.
This growing accumulation trend demonstrates that investors still have confidence in Bitcoin’s price prospects, despite ongoing macroeconomic uncertainty and rising regulatory risks. Recently, the U.S. Federal Reserve maintained interest rates, pausing a 15-month rate-hike cycle. While the bank ruled out rate cuts this year, it kept the door open for more increases if needed. This so-called tightening was partly to blame for last year’s turmoil in the crypto market.
Additionally, earlier this month, the U.S. Securities and Exchange Commission filed lawsuits against prominent digital assets exchanges Coinbase and Binance, accusing them of offering several alternative cryptocurrencies as unregistered securities. These lawsuits, however, did not mention Bitcoin, causing a rotation of funds out of altcoins and into the leading cryptocurrency by market value.
According to Glassnode analyst James Check, the increasing flow into illiquid wallets supports the notion of “a gradual and steady accumulation taking place.” This is evidenced by the record balance held by illiquid entities and the decreasing exchange balance. Check added, “Overall, the market appears to be in a period of quiet accumulation, which suggests an undercurrent of demand, despite the regulatory headwinds of late.”
The illiquid supply change indicator turned positive on May 24, indicating a renewal in accumulation and a sharp rise since then. All things being equal, faster accumulation means less supply in the market and the potential for a price increase. Technical charts suggest that there is room for a revival in Bitcoin prices, provided crucial support at $25,200 remains intact and prices do not drop below this level.
At the time of writing, Bitcoin was trading at around $26,750, after reaching a high of over $27,150 during Asian trading hours, according to CoinDesk data. It’s important to consider, however, that while recent data may point to positive trends, the cryptocurrency market is known for its volatility and this analysis should not be considered financial advice.
Source: Coindesk
