Bitcoin Activity Reduction Sees Only 25% of BTC being Transferred Over the Past Six Months
Over the past six months, only 25% of Bitcoin that was not freshly mined has been transferred between online digital wallets.
In comparison, more than half of such Bitcoins were actively moved across addresses towards the end of last year. This is in accordance with a survey conducted by Coin Metrics. Before the famous price surge of December 2017, the levels of activity involving Bitcoin transfers were as low as they are currently in 2015. According to Nick Carter, a co-founder of Coin Metrics, this revelation shows that the Bitcoin market is still in recess.
Additionally, Coin Metrics also indicated that the movement of Bitcoin, exclusive of newly mined coins, has reduced from 60% in Q4 2017 to 50% over the past 12 months. Currently, the number of existing Bitcoin tokens is 17 million. Since the original Bitcoin whitepaper stipulates that the supply of Bitcoin tokens will be limited, it is expected that only 4 million additional Bitcoins will be generated through mining.
The reduced Bitcoin activity is particularly surprising, especially given the flurry of new investors that purchased the digital currency when its price reached a record high of $20,000. Notably, most of these investors bought Bitcoin with the hope that its price will increase, allowing them to sell for a profit. However, the bearish trend since the beginning of 2018 meant that these investors had nowhere to sell the Bitcoins. The presumption is that if Bitcoin goes on another bullish run, a majority of them will sell.
The aforementioned assumption is not entirely true – after all, history indicates that a sizable portion of Bitcoin never trades. Precisely, 40% of Bitcoins are either lost or stored in cold storage. Moreover, Coin Metrics states that 25-35% of Bitcoins are kept in a semi-liquid state, meaning that they are only traded during bull runs when long-term investors sell to gain profits. During bear runs, only 30% of Bitcoins are actively traded.
Still, CoinMarketCap reports that Bitcoin averages daily transactions worth $4 billion, despite the plummeting of daily trading volume by 80% since January. This shows that Bitcoin still has sufficient liquidity.