Bitcoin is becoming scarcer!
Illiquid Supply is outpacing Issuance
Dear subscriber,
I am excited about how quickly Bitcoin Strategy is growing! If you just joined and missed the latest price forecasts, please do check them out:
In this newsletter, we’ll focus on Bitcoin’s scarcity. During my latest appearance on @WhatBitcoinDid with @PeterMcCormack, I showcased the HODL Model S, a model designed to forecast the scarcity of Bitcoin, along with many other informative charts. If you haven’t seen that yet, make sure to watch the video!
Limited on time? The HODL Model conversation starts at 37:40.
The bullish on-chain divergence that is playing out in front of our eyes is illiquid supply outpacing new supply issuance. While the amount of new supply entering circulation halves with every halving and is flattening out — currently 19 Million coins of the 21 Million have been mined — illiquid supply growth keeps steadily rising due to HODL mentality.
Illiquid supply is idle supply and mostly unaffected by price movements. If we subtract the illiquid supply from the total supply in circulation, what we’re left with is the available supply for trade. The available supply for trade is a way to define Bitcoin’s scarcity.
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Below chart shows Bitcoin’s scarcity in terms of available supply for trade. It’s clearly visible how since the third halving Bitcoin is becoming scarcer!
👆 Chart now live available.
The chart above includes the HODL Model and its more optimistic variant, the HODL Model S, which both aim at predicting future illiquid supply growth and, therefore, Bitcoin’s scarcity.
Note: Bitcoin becoming more scarce is not something that is immediately reflected in price. The third halving was the moment in time where Bitcoin was the most abundant in its history. While we are decreasing at a rapid pace, Bitcoin is still more abundant than it was at the beginning of the 2017 cycle.
If you want to read in more detail about the HODL model, you can check out the following Bitcoin Magazine article:
I sincerely hope you enjoyed today’s content. If anything, you can always reply to my emails.
-Root
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