A study released by Diar on 17 September 2018 found that 42% of all Bitcoin in circulation were held in wallets containing over BTC 200 that have had zero outgoing transactions since the price peak of USD 20,000 in December 2017. This indicates that Bitcoiners are strongly hodling, and this probably explains the USD 5,800 support level that has been tested over and over during 2018 but remains impenetrable.

Wallets holding over BTC 200 are easily classified as investment wallets, since as of 26 September, BTC 200 is worth USD 1.3 million. Additionally, 27% of these investment wallets have added to their balances despite the bear market of 2018.

Diar research makes estimates about the rest of the Bitcoins, suggesting that 13% are used for transactions and very liquid, 15% are in exchange wallets and actively being bought and sold, and a whopping 30% of Bitcoins, which is BTC 5.2 million, are lost or illiquid. This estimation of lost Bitcoins dwarfs other estimates which say BTC 2 million are lost, but also includes some BTC 1 million mined by Satoshi Nakamoto that haven’t moved, making them illiquid. It is practically impossible to exactly estimate how many Bitcoins are lost or illiquid.

Regardless, the important thing to learn from this study is that 28% of Bitcoins are liquid and actively being traded, while at least 42% are being held in investment wallets. This probably explains why despite immense selling pressure during 2018, Bitcoin has not gone below USD 5,800. Bitcoin has bounced off the USD 5,800 to USD 6,500 range multiple times.

Basically, there are far fewer Bitcoins that are liquid and able to be dumped than those being held by whales, and far fewer liquid Bitcoins when compared to held Bitcoins combined with lost or illiquid Bitcoins. As Bitcoin’s price crashes, the supply in the hands of those willing to dump them dwindles. This study from Diar is proof that Bitcoin selling can be exhausted, since most Bitcoins are not available for sale. Clearly, that point of Bitcoin selling exhaustion is somewhere around USD 5,800, a level likely set by the law of supply and demand.


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