Blockchain analytics platform Glassnode has shared some key insights regarding Bitcoin liquidity levels amidst a rather volatile market period. Notably, the leading cryptocurrency has struggled to maintain its “uptober” form after its price soared to $126,000, followed by a significant correction below $105,000. Since then, Bitcoin has shown some recovery activity, but has yet to break above the $115,000 resistance, holding its total monthly gain to 0.47%.
Bitcoin liquidity rises, testing strength of demand
In an October 25th X post, Glassnode reported that Bitcoin’s illiquid supply has decreased by 62,000 BTC since mid-October. For context, illiquid Bitcoin refers to BTC held in wallets with little or no sales history. These are essentially coins that are unlikely to move, as their holders rarely use them and they are considered to never leave the market.
Therefore, a decrease in illiquid BTC suggests that more coins are returning to active circulation, increasing the available supply. This dynamic could make sustained price increases more difficult unless offset by a surge in demand.
Glassnode explains that prior to the recent selloff, increased illiquidity supply had been a positive catalyst in this market cycle. Historically, similar pullbacks, such as the 400,000 BTC drop in January 2024, have tended to slow market momentum by increasing the amount of Bitcoin in active circulation.
Who is behind the sale?
While analyzing this decline in illiquid BTC, Glassnode further discovered that the accumulation activity of Bitcoin whales is accelerating. Notably, BTC wallets have increased their holdings over the past 30 days, but large positions have yet to be liquidated since October 15th.
Therefore, the rise in BTC liquidity has been driven by retail investors. Further data from Glassnode reveals that wallets holding between 0.1 and 10 BTC, or between $10,000 and $1,000,000, consistently generate large outflows. Notably, this set of traders has been steadily reducing their BTC exposure since November 2024.
Regarding recent price trends, Glassnode analysts point out that momentum buyers, mainly retail investors, are increasingly exiting the market. Although push buyers, or whales, have stepped up their activity, their demand has not been sufficient to absorb the excess supply, leading to the price imbalances currently observed.
At the time of writing, Bitcoin is trading at $111,570, reflecting a modest increase of 0.89% over the past 24 hours. On a higher time frame, the leading cryptocurrency registered a gain of 4.11% over the past week and a gain of just 0.05% over the past month.
Featured image from Flickr, chart from Tradingview
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