Quantifying the Bitcoin supply shortage

[ad_1]

The following is taken from a recent edition of Deep Dive, Bitcoin Magazine’s high-end market newsletter. To be among the first to receive this and other on-chain bitcoin market analysis straight to your inbox, subscribe now.

When looking at the bitcoin supply, it is important to consider the state of the floating supply, an estimate of the bitcoin available in the market for sale. One way to estimate free float is to look at the supply of short-term holders plus the balance of supply on total exchanges and as a percentage of outstanding supply. If you were to add a long term support offer to these two, the offer is almost identical to the outstanding offer.

The current floating supply is 5.52 million bitcoins worth $ 317 billion at the current market price. But we do know that any large bid to take bitcoin free float out of the market can push the price up, other things being equal, raising the market value of the USD with each new bid.

Source: Glassnode

Source: Glassnode

This estimate of the floating supply is now 29.31% of the supply in circulation, which rose from 49% at the peak of the 2018 cycle and from 41% at the peak of the historic highs of March 2021. This is the lowest level of floating supply in the past four years, since January 2017, when the price dropped to 21x in just 12 months.

The float supply also peaks with the peak of the bull cycle nearing 50% as long-term holders flood the market with more bitcoin, making profits. As prices rise we will see activity similar to 2018 with an increasing float offer, with some long term holders taking their profits by transferring bitcoin to short term holders until the purchase is over. exhausted.

Source: Glassnode

[ad_2]