Blockchain analytics company IntoTheBlock has analyzed on-chain data and found that approximately 29% of all circulating bitcoins (BTC) have not been moved for more than five years. This significant portion of unmoved assets could potentially represent lost coins, according to analysts at IntoTheBlock. Their findings align with a recent report from crypto exchange Bitfinex, which revealed that the amount of unmoved BTC has hit an all-time high. This decrease in liquidity could have implications for the overall market.
Prolonged Dormancy: Lost Coins or Investor Confidence?
Bitfinex’s report also highlighted that around 70% of BTC’s circulating supply has remained dormant for at least a year, marking a record high since the inception of the leading cryptocurrency. While there is no definitive explanation for this prolonged dormancy, IntoTheBlock’s analysts speculate that a significant portion of the unmoved coins may be lost forever. On the other hand, it could also indicate growing interest from investors, particularly institutions, who hold a bullish sentiment towards Bitcoin and recognize its long-term potential as a viable investment option.
Investor Outlook and the Bitcoin Halving Event
The HODLing (holding) attitude displayed by both large and institutional investors suggests their expectation of positive price action for BTC. This further underscores their confidence in Bitcoin as an asset and their belief in its future value. One factor to consider is the upcoming Bitcoin halving event scheduled for April 2024. This event occurs every four years, specifically at the 210,000-block mark, and results in the block reward for BTC mining being halved. Bitcoin’s fourth halving will decrease block rewards from 6.25 BTC to 3.125 BTC.
Accumulation and Positive Price Action
Market participants view the halving event as a bullish signal for Bitcoin. It enhances the cryptocurrency’s potential scarcity, impacts its supply-demand dynamics, and ultimately has a positive effect on its value. As the halving approaches, crypto funds and investment firms are accumulating BTC at its current price level. This strategy allows them to increase their holdings and position themselves for potential positive price action in the future.
In summary, the considerable percentage of unmoved Bitcoin in circulation, as identified by IntoTheBlock’s analysis, suggests the presence of lost coins and potentially reduced liquidity. However, it could also indicate a strong investor confidence in Bitcoin’s long-term prospects. The upcoming Bitcoin halving event further contributes to this optimistic outlook, as market participants accumulate BTC in anticipation of positive price action.