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7 December 2023
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Bitcoin’s (BTC) 200-WMA Average Builds Strength, Faces Supply & Liquidity Shortage

While Bitcoin entered a sharp correction on Monday, December 21, its 200-week moving average shows that it continues to build strength every passing week. Bitcoin analyst and author of stock-to-flow (S2F) model – PlanB – shows that the 200-WMA (at $7700) is surging faster than expected at 6.5% per month.

MicroStrategy CEO Michael Saylor was quick to respond to it. In a tweet, he noted:

“Bitcoin (BTC) is like a battery charged with monetary energy. Since a rational investment time horizon is ~4 years, as long as the price is trading above the 200 week moving average (200WMA), the network is powering up. The more intensely it trades, the faster absorbs energy”.

On Monday, Bitcoin (BTC) entered a sharp correction taking a dip below $22,000 before recovering back above $22,700 levels. Well, guess what who made the most of the dip? Michael Saylor’s MicroStrategy pumped a whopping $650 million into Bitcoins buying at $21,925 levels. The investment comes just at a time when JPMorgan strategists noted that institutional inflows in Bitcoin funds are essential to keep its momentum going.

At press time, BTC is trading at a price of $22,898 with a market cap of $423 billion. Despite Monday’s correction, BTC is up over 16% on weekly charts. Other indicators like the BTC supply and liquidity crunch also hint at a bullish momentum ahead.

Bitcoin (BTC) Facing Supply and Liquidity Shortage

Glassnode CTO Rafael Schultze Kraft presents some interesting on-chain indicators explaining the supply and liquidity crisis in Bitcoin (BTC) and why he is extremely bullish.

Let’s look at some of the exciting data that Rafal presents.

  • True Bitcoin (BTC) HODLers are currently holding 14.5% of the total supply. The total Bitcoins (BTC) he’s in accumulation addresses is 2.7M. These are addresses that have never spent any Bitcoin, but only received them.
  • Although the total supply of Bitcoin is capped at 21 million, nearly 16% of the supply i.e. 3M are lost coins. Thus, the actual availability of BTC is lesser than the total coins.
  • Institutional demand continues to spike on a month-on-month basis.
  • Since Bitcoin halving in May 2020, nearly 185,000 BTC have been mined. On the other hand, Grayscale purchased 210,000 BTC during the same period. Meaning they purchased more than the BTC issued.
  • As we know, Bitcoin (BTC) liquidity has been quickly vanishing from the exchanges. Most of it is likely going to cold storage after massive institutional Bitcoin OTC deals in the last few months.
  • 14.4M BTC is held by illiquid entities – that is 78% (!) of the current supply. Illiquid entities act as supply sinks since they spend less than 25% of the Bitcoins they receive.
  • Interestingly, Rafael also points out that miners have yet not resorted to profit-boking in the recent bull run. Instead, the miner unspent supply continues to increase since the last halving. The current miner balance is 1.7 million BTC.

This exciting data presented by the Glassnode CTO clearly hints that bullish momentum is certainly building and Bitcoin (BTC) still has a lot of steam in it before starting any downward journey.


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