Very few bitcoins actually move, but the liquidity situation could change soon

important knowledge

• The spot volume remains low and the liquidity on the Bitcoin markets low
• Only 2.7 % of the offer were moved in the last week; 7 % are moved in the last month
• In comparison, 7 % of the total offer of bitcoins
• The uncertainty is high due to the tightening of the regulation and the macroclimas
• Since institutions submit ETFs and start exchanges, the liquidity situation could change drastically in the future

market participants will know that the Bitcoin market has developed incredibly, if at all, illiquid.

until November 2022 the market depth was low anyway. Then came the FTX Implosion and a hole in the size of Alameda in the order books. Bankman-Fried's trading company was also one of the biggest market makers ever, and the depth of the market has never recovered since its downfall.

The effect has increased in the past few months due to the regulatory resolution in the USA. We saw how a number of market makers have returned their shops in the USA, including Jump Crypto and Jane Street in May (Ironically, Bankman-Fried worked for the latter before founding Alameda).

We have compiled a data diving We already pointed out this in March, but if we look at the balance of the stable coins on the stock exchanges below, we can see that 60 % of the stable coins have left the stock exchanges in just over six months, which corresponds to a value of $ 26 billion.

We can also see below that a large part of the volume was obtained from the beginning of the year due to the free advertising campaigns by Binance. When this funding ended, the ratio of the futures-to-spot volume increased, which shows that even this low level of the spot volume was somehow artificially supported by zero fees (graphic over Kaiko).

In fact, one of the (many) allegations with which Binance is faced with the fact that the stock exchange has operated "targeted wash trading" to increase volumes. Therefore, the flat volume could actually be even flatter.

In the meantime we know all of this. However, I would like to take a moment to assess the offer side of the equation. From the first day on, Bitcoin has two properties that make it so fascinating: a final limited stock of 21 million coins and a predetermined schedule to which these coins are released (whereby the supply limit is expected to be reached this year). 2140).

To date, 92.4 % of the Bitcoin offer are already released. By calling up a few on-chain data, I presented the percentage of the coins below, which moved in the last month compared to the overall offer. This gives an indication of how many coins move due to commercial activity.

The graphic shows that 1.4 million coins were moved last month, which corresponds to 7 % of the circulating offer. In truth, a month is probably a time horizon. The limitation of a (still conservative) week in the next diagram shows that about half a million coins move, about 2.7 % of the overall offer.

These diagrams clarify even more how little bitcoins are actually in circulation these days. If I can actually use another diagram to illustrate the scarcity prevailing here, let's take a look at the next that contains an estimate of the lost coins. These lost coins are estimated by Glassnode and are coins that have been inactive since the start of the first Bitcoin exchange in July 2010 (since coins from the period before July 2010 are issued, this estimate matches the actual number of lost coins; this is not the case). A perfect measure, but a good estimate).

The graphic shows that 7.5 % of the total offer can currently be assessed as lost (Satoshi nakamotos supply is included here). This means that it corresponds approximately to the number of coins that were moved last month and triple the number of coins that were moved last week.

Therefore only a small part of the offer for Bitcoin. On the one hand, this sounds bullish - an often repeated mantra in the industry is that a dwindling offer will inevitably lead to a price increase. However, this is only the case if the low supply faces increasing demand.

If we look at the order books and the depth of the market in the past nine months, the low liquidity gives rise to concern. However, there have been several important developments in the past two weeks that hope that this could change. Blackrock, the world's largest asset manager, applied for a spot bitcoin ETF, but his colleague Fidelity quickly followed. In addition, the EDX stock exchange is introduced, which is supported by the commercial giants Fidelity, Schwab and Citadel.

Even the tightening of the regulatory loops around Binance could help to draw a clearer picture for the future of the area and to give investors the trust that something is finally done to eliminate the opaque parts of the industry.

In summary it can be said that it is very likely that in a few years we will look back on these extremely scarce liquidity conditions. The uncertainty is currently extreme, both in terms of regulation and the macroeconomic location. The day will come when this will no longer be the case, and things could be very different. But at the moment it's thin out there.