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Bitcoin (BTC) Supply: 73.5% in Hands of Long-Term Holders

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Bitcoin is becoming increasingly scarce. The current level of BTC supply in the hands of long-term holders is approaching its all-time high set in 2015. On-chain data shows a record pace at which investors withdraw their coins and move them to cold wallets.

Historically, such situations have occurred at the bottom of cryptocurrency macrocycles. Therefore, the high level of Bitcoin supply in the hands of LTH and the upcoming BTC halving could become catalysts for a new crypto bull market.

Bitcoin Supply vs. Price

Bitcoin supply (orange line) is determined by a mathematical algorithm that drives the largest cryptocurrency to the amount of 21 million BTC that can ever be mined. New BTCs are awarded to miners for solving a mathematical task to validate the next block of the network chain.

However, the supply of Bitcoin is growing at a decreasing rate, which is regulated by the so-called halving (dashed line). Roughly every four years, the reward given to BTC miners is reduced by half. In turn, this makes fewer and fewer newly mined coins available on the market.

The result of this and the simple economics of supply and demand is that the price of the largest cryptocurrency increases over time (black curve). In short, the limited supply and decreasing issuance of new coins increase Bitcoin’s scarcity.

This scarcity, combined with cryptographic security, durability, and transparency – to name just the most important attributes of the Bitcoin network – increases the price investors are willing to pay for this digital asset.

Bitcoin supply / Source: Glassnode

It is worth adding that the above Bitcoin supply chart is often modified by coins that are considered lost. By definition, lost coins have not moved for at least 7 years.

Then we get a metric of adjusted circulating supply, which takes into account lost coins. As seen below, the

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Author: Jakub Dziadkowiec

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