bitcoin short-term supply Archives

Data shows Bitcoin short-term supply has reached an all-time low value. This may mean that investors aren’t keen to sell at this level despite the latest rally up where the coin broke $57k.

Bitcoin Short-Term Supply Records All-Time Lows

According to the latest Arcane Research weekly report, the BTC short-term supply is currently floating around all-time low values.

The “short-term supply” here refers to the supply of coins that were moved on the chain within the last three months.

When this indicator’s value moves up, it means there are a lot of short-term holders in the market right now who are looking to make a quick profit.

On the other hand, a decrease in the metric’s value suggests not many holders are interested in selling right now, and that they are waiting for longer gains.

Now, here is a chart that shows the trend in the Bitcoin short-term supply over its entire history:

Looks like the indicator is currently touching all-time lows | Source: The Arcane Research Weekly Update – Week 40

As the above graph shows, the short-term supply has been on a downtrend in the past few months, and has now reached lows never seen before.

Looking at the chart, it seems like the only other time the indicator showed values close to this low was back in 2015.

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On 30th September, the BTC short-term supply was at around 14.7%. This is its lowest value ever. In the past couple of weeks since then, the metric has seen a slight increase to 14.9%.

The reason behind this small rise is Bitcoin’s current rally where the coin broke $47k for the first time since May of this year.

One thing to note here is that this indicator is based on the on-chain movement of the coins. So if some investors are keeping their BTC on exchanges rather than personal wallets, the metric will not show any rise when they sell their coins on the exchange.

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Because of this, the short-term supply isn’t the most accurate indicator of whether investors are realizing their profits or not. Nonetheless, it does show that many holders with their own wallets are holding off on selling right now as they think the price will go further up.

BTC Price

At the time of writing, Bitcoin’s price floats around $54.9k, up 0.7% in the last seven days. Over the past month, the crypto has gained 24.6% in value.

The below chart shows the trend in the price of BTC over the last five days:

Looks like Bitcoin is showing a dip right now after a large move up | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, Arcane Research

This year has been marked by numerous lows for bitcoin. The digital asset has seen yearly lows in the exchange reserves, transaction fees, and now, the short-term supply of bitcoin is down. The short-term supply has been shrinking for the past year. With declining volumes showing trends that have not been seen in the past five years. Given the low volume of bitcoin transactions, which has led to low transaction fees, only few bitcoins are moving around the network.

One And Three-Month Lows Show Shrinkage

Bitcoin is no longer being spent as it was in the past. One of the leading ideas behind the creation of the digital asset was so it could double as a currency, one which was not controlled by any one person or entity. Early adopters stuck to this initial vision. Using BTC for purchases where they can. Metrics show that in the past month, 6.8% of the asset’s total supply has been spent. While the three-month trend shows that only 15.8% of the total supply has been spent by investors.

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The three-month lows show the short-term supply of bitcoin is shrinking to 2015 lows. In the month of August, short-term supply hit a low of 6.75%. With a slight increase that only happened after the asset had recovered back towards the $50,000 mark. But this did not last long. The supply per month is in a declining trend, indicating that subsequent months will also see shrinking short-term supply.

BTC supply has continually shrunk for the past three months | Source: Arcane Research
How Short-Term Supply Affects Bitcoin Price

Although low, the declining short-term supply of bitcoin does spell good news for the asset. It indicates that investors are still holding on to their coins, showing bullish sentiment amongst the investor community. It also shows that bitcoin’s recent gains have motivated investors to hold their funds. Instead of moving it onto exchanges to sell and cash out their gains.

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With hold sentiment on the rise, it will play into the favor of BTC. The asset’s value is likely to rise with more investors holding their BTC bags. Increased sell pressure also motivates new investors to buy into the coins. Simultaneously motivating old investors to stay and ride out the low periods in wait for the bull markets.

BTC price trading above $48,000 | Source: BTCUSD on TradingView.com

The current trends show declining short-term supply has happened when the asset has witnessed a crash or dip in its price. It is obvious that investors are taking advantage of these price dips to top up their bags. Panic selling has also dropped dramatically in the market with more understanding of price movements. Leading to more diamond hands in the market. Bitcoin, it seems, has entered the era of holding.

Featured image from Master The Crypto, chart from TradingView.com