What happened?
Bitcoin’s supply dynamics are changing significantly as the number of long-held, untouched Bitcoin (“ancient” coins) surpasses newly mined Bitcoins each day. For the first time, 550 Bitcoins per day are being classified as “ancient,” which outpaces the daily mining rate of 450 Bitcoins. This shift indicates a historic inversion in Bitcoin’s supply mechanics, with over 17% of total Bitcoin supply now considered illiquid and potentially rising to 30% by 2026.
Who does this affect?
This change impacts Bitcoin holders, miners, and potential investors. Long-term holders are showing strong conviction in their investments, as indicated by the increased illiquidity in Bitcoin’s supply. Meanwhile, miners are facing a scenario where new coins are not keeping up with the growing inactive supply, affecting the dynamics of market pricing and new entrants looking to invest.
Why does this matter?
The tightening supply of Bitcoin could lead to a potential supply shock, affecting market prices and investor strategies. With demand expected to increase due to institutional interest and significant capital inflows, Bitcoin’s price could rise as the available liquid supply decreases. This scenario creates strong market impacts, attracting more investments and possibly increasing Bitcoin’s value significantly in the near future.