Fidelity Projects Significant Increase in Bitcoin’s Illiquid Supply by 2032
Asset manager Fidelity has forecasted that nearly 42% of Bitcoin’s circulating supply—equivalent to 8.3 million BTC—could become illiquid by the second quarter of 2032 if current trends persist. This analysis was published in a report released on Monday, highlighting the growing accumulation of Bitcoin by long-term holders and publicly traded companies.
Defining Illiquid Bitcoin Supply
Fidelity categorized Bitcoin holders into two main groups whose supply is considered illiquid: long-term holders who have not moved their coins for at least seven years, and publicly traded companies holding a minimum of 1,000 BTC. Both cohorts have demonstrated a consistent increase in Bitcoin holdings, with their balances rising in at least 90% of the last sixteen quarters.
The firm estimates that by the end of 2025, these two groups will collectively hold over six million BTC, representing more than 28% of the maximum 21 million Bitcoin supply. Notably, long-term holders have not decreased their supply since 2016, indicating a strong propensity to hold.
Institutional Accumulation on the Rise
Publicly traded companies have also expanded their Bitcoin reserves, with the total holdings surpassing 969,000 BTC—approximately 4.61% of Bitcoin’s total supply. The number of such companies currently stands at 105, and their holdings have remained largely stable, except for a single quarter of decline in Q2 2022.
Implications for Market Liquidity and Price
The growing illiquid supply reduces the amount of Bitcoin available for trading on open markets, which could exert upward pressure on prices. Fidelity’s projections assume the continuation of current accumulation rates by long-term holders but do not account for additional supply constraints that may arise from further institutional buying.
Risks of Whale Sell-Offs
Despite the accumulation trend, the report cautions about potential volatility from large-scale sales by Bitcoin whales. These entities currently control Bitcoin valued at $628 billion at an average price of $107,700, nearly double the valuation from the previous year. Over the past 30 days, whales have sold approximately $12.7 billion worth of BTC, marking the largest sell-off since mid-2022, coinciding with a 2% decline in Bitcoin’s price.
Such sell-offs could introduce short-term downward pressure on Bitcoin prices, underscoring the importance of monitoring whale activity alongside the broader accumulation trends.
FinOracleAI — Market View
Fidelity’s projection of a rising illiquid Bitcoin supply suggests a tightening market that could support price appreciation over the medium term, given reduced liquidity. However, the recent significant BTC sell-offs by whales indicate potential volatility risks in the short term. Investors should watch for changes in whale behavior and institutional buying patterns, which will be key drivers of Bitcoin’s price dynamics.
Impact: positive
