According to data provided by on-chain analytics provider Glassnode, although Bitcoin has been trading sideways so far this year, more BTC has become illiquid.
In particular, there appears to have been an acceleration in the growth of illiquid supply, which now comprises more than three-quarters, or 76%, of the total outstanding supply of the market's largest crypto.
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Glassnode defines illiquidity as the point at which BTC moves into a wallet with no history of spending. The liquid supply of BTC, which makes up 24% of the total, is in wallets that spend or trade on a regular basis, such as exchanges and hot wallets. According to the analysts of the company:
"We can see that over the final months of 2021, even as prices corrected, there has been an acceleration of coins from liquid, into Illiquid wallets."
The data suggests that crypto investors are moving their coins into their storage wallets, highlighting their intention to own the cryptocurrency for the long term rather than sell it. The decline in highly liquid supply also hints that a major sell-off or capitulation event may not occur in the near future.