Diamond Hands: 80% Of Bitcoin Circulating Supply Now Owned By Long-Term Holders

Investors are holding on to their bitcoins now more than ever. The sell trends that are usually experienced during bull markets have not been seen with recent rallies, suggesting that holders across the board are choosing to hold on to their cryptocurrencies rather than selling them off for a profit. These have led to fewer ‘weak hands’ in the market and ‘diamond hands’ have been on the rise.

A Glassnode report shows that the number of bitcoin long-term holders has hit a new all-time high. A record 80.5% of bitcoin’s circulating supply is now being held in long-term wallets. This comes despite recent downturns that pushed market sentiment into extreme fear. Individual and institutional investors alike have taken declining prices as an opportunity to “buy the dip”.

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Bitcoin Short-Term Supply Hits Six-Year Low

A report from Bitcoinist highlighted that bitcoin supply had hit a new low. The total amount of bitcoin spent within a three-month period had come out to just 16.6% of the entire circulating supply of the digital asset, a volume that had not been seen since 2015. This showed strong hold sentiment among investors, who are buying more and selling less, and moving their coins to secure wallets to hold it for the long-term.

BTC price falls to low $42,000 | Source: BTCUSD on TradingView.cm

The declining short-term supply contributes directly to the increase in diamond hands across the market. Bringing into light another interesting trend that showed that investors were going against the grain with bull markets. An Arcane Research report showed that even when bitcoin prices were on the rise, the short-term circulating supply had continued to drop.

A drop in short-term supply over time will lead to a supply squeeze, where there will not be enough supply to feed the demand from crypto investors. This will inadvertently lead to scarcity and will cause the price of the digital asset to shoot up over time.

Whales Are Not Left Out Of The Action

The number of bitcoin whales has gone down significantly over the past few months. These wallets which hold at least 1,000 hold almost half of bitcoin’s circulating supply. The number of these wallets has declined either due to these holders selling off their holdings or consolidating their holdings into single wallets for safekeeping. But the whale wallets that remain are picking up the slack.

Related Reading | Deutsche Bank Analyst Marion Laboure Says Bitcoin Is Here To Stay As Digital Gold

Data shows that despite the declining number of whale wallets with at least 1,000 bitcoins, the volume of bitcoin which is held by the leftover whale address is only 1% less than was held by the total number of whale addresses. This indicates whales are buying up and holding more bitcoins, and the number of diamond hands holders in the market has gone up.

Featured image from Coingape, chart from TradingView.com