Do the Math: Long-term Bitcoin HODLers Own Over 75% of BTC

Bitcoin (BTC) has long been a store of value (like gold) more than a token traders might flip for a quick buck. However, the prevalence of long-term investors surprised even some of Bitcoin’s strongest proponents, with 76% of all supply held by long-term holders (LTHs). The figure, extracted from a supply analysis report from Glassnode Academy, represents the highest proportion of LTHs in Bitcoin’s history, surpassing the previous high in 2016.

Source: academy.glassnode.com

Do the Math, Experts Say

The record amount of Bitcoin locked up in wallets (or another form of long-term crypto storage) can be interpreted in a couple of ways. For one thing, it demonstrates that most BTC investors believe in the asset’s future potential. But more importantly, it means that the liquid supply of Bitcoin is drying up. So for active market participants, there is less and less available BTC to trade – and if first-time investors keep buying BTC, demand will begin to seriously outpace supply.

As Charles Edwards, founder of investment firm Capriole Investments, put it:

“Less liquid supply means the same people are bidding on less coins. You do the math.”

Short-term holders takeover at the tail end of bull markets

For most of Bitcoin’s history, ownership has been dominated by long-term holders. It is usually only during the end of bull markets where more than 30-40% of supply is dictated by short-term holders (or speculators). Such investors may be traders or newcomers to the market, brought in by the hype that comes alongside a crypto bull run. 

However, as market conditions reverse and BTC’s price starts to slip, many of these investors will liquidate their positions and exit the market. This leaves a dip in supply that is slowly accumulated by long-term HODLers throughout the bear market. With that said, the proportion of long-term holders has consistently trended upwards, despite 2021 being a significantly more explosive bull market than that of 2017.