Blockchain analytics platform Glassnode has shared some key insights into Bitcoin’s liquidity levels amid a fairly volatile market period. Notably, the leading cryptocurrency has struggled to maintain its ‘Uptober’ form after a price rally to $126,000 was followed by a sharp correction to below $105,000. Although Bitcoin has shown some recovery activity since then, it has yet to break above the $115,000 resistance, while its overall monthly gain stands at 0.47%.
Bitcoin liquidity rises, tests strength of demand
In one X posts on October 25, Glassnode reports that Bitcoin’s illiquid supply has decreased by 62,000 BTC since mid-October. In context, Illiquid Bitcoin refers to BTC held in wallets with little or no history of sales. They are essentially coins that are unlikely to move because their holders rarely spend and are considered out of the market.
Therefore, a decline in illiquid BTC indicates that more coins are returning to active circulation, increasing available supply. This dynamic may make sustained price growth more challenging if not offset by a strong increase in demand.
Glassnode explains that illiquid supply growth has been a positive catalyst in this market cycle before this latest downturn occurred. Historically, similar pullbacks, such as the 400,000 BTC drop in January 2024, have tended to slow market momentum by increasing the amount of Bitcoin in active circulation.
Who is behind the sale?
By analyzing this decline in illiquid BTC, Glassnode further discovered that Bitcoin whales’ hoarding activity has accelerated. In particular, BTC wallets have increased their holdings over the past 30 days and have yet to liquidate any large positions since October 15th.
Therefore, the increase in BTC liquidity has been driven by private investors. More data from Glassnode reveals that wallets with between 0.1-10 BTC, i.e. $10,000 to $1,000,000, have produced consistent strong outflows. In particular, this set of traders has been steadily reducing their BTC exposure since November 2024.
Regarding recent price action, Glassnode analysts note that momentum buyers, primarily retail investors, are increasingly exiting the market. Although dip buyers, ie. whales, have increased their activity, their demand has not been sufficient to absorb the excess supply, leading to the price imbalance currently observed.
At the time of writing, Bitcoin is trading at $111,570, reflecting a modest 0.89% gain over the past 24 hours. On higher timeframes, the leading cryptocurrency has seen a gain of 4.11% over the past week and a marginal gain of 0.05% over the past month.
Featured image from Flickr, chart from Tradingview
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