The recent data from asset management firm Fidelity suggests that up to 42% of Bitcoin’s current circulating supply, which amounts to about 8.3 million Bitcoin, could potentially become illiquid by 2032. This forecast is based on the present pattern of Bitcoin treasury firm purchases. The information was disclosed in a report published by Fidelity on Monday. It states that two specific groups whose supply could be recognized as illiquid, with a key determining factor being an increasing Bitcoin supply each quarter or at least 90% of the time in the last four years.
Two Distinct Cohorts
On careful analysis, Fidelity was able to identify two distinct groups: core Bitcoin holders who have invested in Bitcoin for the long term, and publicly traded organizations owning a minimum of 1,000 Bitcoin. The latter set of investors has seen steady growth this year. Interestingly, the limited supply of Bitcoin in public circulation implies less availability of Bitcoin in the open market. This scenario is likely to favorably influence the price of Bitcoin.
According to Fidelity, “This combined group is on track to hold more than six million Bitcoin by the end of 2025, equivalent to over 28% of the total 21 million Bitcoin that will ever exist”. This is a strong statement considering that for long-term Bitcoin holders, defined as those who have not moved Bitcoin from their wallet in at least seven years, the supply has not declined since 2016.
Trends Among Publicly Traded Companies Owning Bitcoin
Another interesting factor is the behavior of publicly traded companies holding at least 1,000 BTC. These firms have also held onto their Bitcoin assets consistently, having experienced a solitary quarter of supply decrease in Q2 2022. The number of such firms is expected to rise in the future as the figure currently stands at 105. At present, these organizations own more than 969,000 BTC, which amounts to 4.61% of Bitcoin’s total supply.
Fidelity’s Future Predictions
Fidelity’s forecasts reveal that almost 8.3 million BTC could become illiquid by Q2 2032. This projection was obtained by assuming that the number of wallets holding Bitcoin for a minimum of seven years will continue their upward trajectory as seen in the last decade. Furthermore, the report did not account for extra supply shortages as a result of acquisitions by more public institutions.
Towards the end of Q2 2025, Bitcoin’s circulating supply is projected to be roughly 19.8 million. From this supply, Fidelity estimates that nearly 42%, or over 8.3 million Bitcoin, will be seen as illiquid by Q2 2032. This insight indicates that the combined holdings of the two groups hold worth $628 billion in Bitcoin at an average price of $107,700, which is double the price in the previous year at the end of Q2.
Potential Impact on Bitcoin’s Price
This prediction raises questions about how the price of Bitcoin could be impacted if these massive Bitcoin holders decide to sell their assets. Recently, it was reported that Bitcoin whales have sold BTC worth nearly $12.7 billion within the last 30 days – the largest sell-off since mid-2022. Concurrently, Bitcoin’s price has fallen by 2% in the past month. Only time will tell how the continuing increase in illiquid Bitcoin will impact its market dynamics and price behavior.
