The last few months have been extremely difficult for Bitcoin. Nonetheless, members of the community believe that the coming months will make up for the losses.
Recently, the Bitcoin market has been subjected to a variety of squeezes. So, after the volatility squeeze and the short squeeze, is the market about to experience the dreaded ‘supply squeeze’? Let us first examine the supply dynamics before answering the aforementioned question.
Supply is being squeezed
As such, a supply squeeze or supply shock is an event in which the actively traded Bitcoin supply changes, resulting in a price move in retrospect. The majority of the notable supply shocks occurred during the halving phases and, for the most part, aided the king-price coin’s rally. The next halving is scheduled for 2024, and Bitcoin is likely to experience a squeeze at that time. Is it reasonable to anticipate such an event in the coming months? Yes, according to current supply distribution.
The total supply of coins owned by long-term HODLers stood at 12.48 million BTC at the time of writing. As can be seen from the attached chart, this number corresponds to the volume of coins held by LTHs in October 2020, just before the bullish phase began. As a result, the volume of coins accumulated in the first quarter of this year remains firmly held. Overall, it paints a very positive picture of overall market conviction.
When the adjusted supply is combined with the circulating supply, it is clear that the LTH-owned supply has reached an all-time high of 82.68 percent. Furthermore, the coins held by these investors have been on a consistent upward trend for quite some time.
STH-owned supply, on the other hand, has been declining and now stands at 25%. Surprisingly, major squeezes have occurred when the STH supply ratio has reached 20%. As a result, further maturation of only 5% is required at the moment for the market to revert to its squeeze condition. When this happens, the freely circulating supply will be squeezed.
Furthermore, middle to old-age coins (aged between 3 months and 2 years) has recently seen a significant increase. Surprisingly, these are bull market buyers who are currently leading the charge in HODLing behavior.
This essentially means that coin maturation is taking place, and a slew of bull market buyers have remained and become strong HODLers. Despite the fact that the supply squeeze has not yet reached 20%, the aforementioned trends in play indicate that it [the squeeze] will most likely hit the market around mid-September.
Bull markets are typically the result of a supply squeeze that occurs during bear markets. In fact, we’ve been in a bear market since May. With the preceding analysis in mind, it is possible to conclude that the actual bull run has yet to begin, and the recent surge is merely a preview of what is to come in the coming weeks.