Supply Dynamics of Bitcoin
Like wallets, Bitcoin supply divides into two categories: available and reserved. Available supply includes coins held by short-term holders (STH) and on exchanges. Reserved supply consists of coins untouched for over six months, typically stored in cold wallets.
Since mid-summer, available supply has significantly decreased, reflecting a rise in long-term holders’ balances.
Accumulation Mode and Liveliness Indicator
The “Liveliness” indicator shows the balance between dormant and circulating Bitcoin. It tracks how long coins remain idle before moving again. During the Mt. Gox redistribution, this metric spiked, but it has since returned to an accumulation phase.
In this mode, prices generally rise as new investors face limited supply. However, sluggish demand over the past few months has kept price growth subdued.
Demand Spike and Market Shifts
This week saw a sharp reversal in demand. First, Bitcoin spot ETFs attracted $927 million in just two days.
Additionally, open interest in Bitcoin futures is approaching record levels, nearing $39 billion, last seen in March.
Election Uncertainty and Market Optimism
Uncertainty around the upcoming elections has tempered some large investors’ activity. However, rising optimism over Trump’s chances, who calls himself the “first crypto president,” has brought renewed confidence to the digital asset market.
Bitwise’s Chief Investment Officer, Matt Hougan, observed, “Investors fear missing out when crypto surges.”
