Glassnode’s CTO said that only 12% of all circulating BTC is liquid while the rest is in storage. More than 14.4 million BTC (78%) are stored in liquid wallets such as GreyScale’s.
A growing number of institutions are beginning to acquire Bitcoin amid the enthusiasm of the BTC bullish market, which has taken its price above USD 24,000. However, despite acquisitions amounting to hundreds of thousands of units, Glassnode’s CTO said that only 12% of circulating BTC is liquid, while the rest is in storage.
When Satoshi created the Bitcoin protocol, he established that only 21 million BTC will exist. According to Glassnode, of the 18,577,468 existing BTC, only 12% are in liquid institutions such as crypto exchanges.
This figure indicates that there are more than 14.4 million BTC, about 78%, stored in liquid wallets such as GreyScale.
There is a remainder of only 1.1 million liquid BTC, which is equivalent to USD 26.5 billion. This results in a shortage and an expectation of a “liquidity crisis” in the Bitcoin market for all institutions looking to take advantage of the returns that the digital asset provides.
The Glassnode CTO believes that this phenomenon would generate the entry of a growing number of institutions in the short term. Businesses expect the price of BTC to increase over time, so they would not have time to waste. With this, there would be an even greater reduction of that remainder of 1.1 million BTC.
Even though the phrase “liquidity crisis” sounds somewhat negative, most members of the crypto ecosystem consider it a good reason to celebrate. This could lead to an even greater increase in Bitcoin’s price per unit and the great returns that the pioneering cryptocurrency has provided in this eventful year.
There would only be a few years left to be able to mine all the BTC units. However, thanks to the halving events every four years, that would occur in about 120 years. For that reason, Bitcoin will become increasingly scarce, and liquidity problems will cause its price to rise.
More Institutions Arrive and the Price Increases
The institution that has the most BTC in its portfolio worldwide is US technology company MicroStrategy. They have recently acquired another 29,646 BTC since they believe that Bitcoin will continue to provide the best returns.
MicroStrategy CEO Michael J. Saylor said that they have “the opportunity to get better returns and preserve the value of [their] equity over time with Bitcoin than with cash.”
Another case is the UK insurance mutual fund, which revealed that it had bought more than USD 740 million worth of Bitcoin. Like this company, an increasing number of people arrive or enlarge their holdings of Bitcoin units. For that reason, the “liquidity crisis” could worsen, and the price of the world’s first cryptocurrency would continue heading for the moon.
By Alexander Salazar
