© Reuters.
NEW YORK – The cryptocurrency market is experiencing a notable evolution: it is undergoing a significant transformation of its liquidity. The supply of actively traded liquid bitcoin has fallen to a record low not seen since 2012, standing at just 1,295 million BTC. This reduction in the number of bitcoins available for trading is causing tension among market participants. In contrast, illiquid supply, which reflects a growing trend to hold bitcoins rather than trade them, reached a record high of 15.4 million BTC. This increase includes an addition of 50,000 BTC over the past month, continuing a trend that began in July.
Highly liquid supply also saw a sharp decline to around 2,888 million BTC, marking the lowest level since 2018 and highlighting the current tightening of liquidity in the market. Despite this tightening supply, bitcoin’s value remains near its 18-month peak, but recently dipped below $36,000 following a correction that exceeded three percent from its previous range bear market.
Market dynamics are also reflected in the changing composition of Bitcoin wallet categories. Sentiment data indicates an increase in participation by small investors, with more than 1.5 million new wallets containing less than one bitcoin each created in the past month. Wallets containing between one and a hundred bitcoins have changed little, with a decrease of eighteen addresses, while wallets containing more than a hundred bitcoins have decreased by nineteen addresses, which suggests profit taking on the part of the most big investors.
Despite these changes in wallet distribution and supply dynamics, on-chain metrics paint a positive picture with nearly seven hundred and three thousand transactions recently recorded. Transaction fees reached $18.67 during periods of intense activity such as the Ordinals frenzy. In response to these market conditions and in an effort to attract new traders, Binance Futures launched an incentive program offering a hundred dollar bonus and reduced fees for the first month to its users. This move by one of the largest cryptocurrency exchanges highlights the competitive nature of the market, which adapts to changing liquidity and investor behaviors.
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