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Blockchain analytics platform Glassnode has shared some key insights about Bitcoin's liquidity levels during a reasonably volatile market period. Notably, the leading cryptocurrency struggled to keep up its “Uptober” form after a price rise to $126,000 was followed by a pointy correction to below $105,000. Although Bitcoin has shown some recovery activity since then, it has yet to interrupt the $115,000 resistance while its total monthly gain stands at 0.47%.
Bitcoin liquidity is rising, testing the strength of demand
In an October twenty fifth X post, Glassnode reported that Bitcoin's illiquid supply has fallen by 62,000 BTC since mid-October. For context, Illiquid Bitcoin refers to BTC that’s held in wallets and has little to no sales history. These are essentially coins which can be unlikely to maneuver because their owners rarely spend money and are considered off-market coins.
Therefore, a decline in illiquid BTC suggests that more coins are returning to lively circulation and increasing the available supply. This dynamic could make sustained price growth harder if it just isn’t offset by a powerful surge in demand.
Glassnode explains that the expansion in illiquid supply was a positive catalyst on this market cycle before this recent decline occurred. In the past, similar pullbacks, comparable to the 400,000 BTC drop in January 2024, have tended to slow market momentum by increasing the quantity of Bitcoin in lively circulation.
Source: @glassnode on X
Who is behind the sale?
Analyzing this decline in illiquid BTC, Glassnode also noted that Bitcoin whales’ accumulation activity has accelerated. Notably, BTC wallets have increased their holdings over the past 30 days and haven’t yet liquidated large positions since October fifteenth.
Therefore, the rise in BTC liquidity was driven by retail investors. Additional data from Glassnode shows that wallets with values between 0.1 and 10 BTC, i.e. $10,000 to $1,000,000, consistently experience high outflows. This group of traders specifically has been steadily reducing their BTC exposure since November 2024.
Looking at recent price developments, Glassnode analysts note that momentum buyers, especially retail investors, are increasingly exiting the market. Although dip buyers, i.e. whales, have increased their activity, their demand was not enough to soak up the oversupply, leading to the worth imbalance currently observed.
At the time of writing, Bitcoin is trading at $111,570, up a modest 0.89% within the last 24 hours. On longer time frames, the leading cryptocurrency has seen a 4.11% increase over the past week and a marginal increase of 0.05% over the past month.
BTC is trading at $111,762 on the day by day chart | Source: BTCUSDT chart on Tradingview
Featured image from Flickr, chart from Tradingview
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