A recent report from Fidelity Digital Assets highlights a significant shift in Bitcoin supply dynamics, where the quantity of Bitcoin that has remained stagnant for over a decade now surpasses new mining supply.
What Drives the Surge in Long-term Bitcoin Holdings?
As of June 8, the average daily number of bitcoins crossing the 10-year inactivity mark reached 566, which outpaces daily mining of 450 new bitcoins. This indicates that long-term holders are steadfast. The report notes that the rate of old Bitcoin hold diminishes by less than 3% each day, and for those holding Bitcoin beyond five years, this rate is approximately 13%. Since early 2019, Bitcoin stored inactive for 10 years or more has consistently grown, now totaling around 3.4 million bitcoins, including a third possibly linked to Satoshi Nakamoto.
Is Institutional Interest Affecting Bitcoin’s Supply?
Post the 2024 halving, Bitcoin production saw a contraction. The reservoir of ancient coins continually exceeds new creation, tightening the available liquid supply. Fidelity’s 'ancient supply HODL rate' has remained positive since April 2024, strengthening confidence in long-term retention. Projections are optimistic regarding the ancient supply, as it may constitute 20% of the total by 2028, potentially rising to 25% by 2034. By early June, 27 public entities collectively hold over 800,000 bitcoins.
Future of Bitcoin Supply
The rigid supply cap of Bitcoin at 21 million could effectively reduce to 14.7 million due to static reserves and growing institutional holdings, highlighting the critical role of tracking long-term holding trends in influencing liquidity and market prices. Market observers suggest vigilant monitoring to gauge its impact on volatility and overall dynamics.
The Fidelity Digital Assets report illustrates significant changes in Bitcoin supply dynamics that could have long-lasting market implications. The increase in long-term holders and institutional investments are shaping new trends that may substantially impact prices and liquidity.
