On-chain data indicates that long-term investors are accumulating Bitcoin, per UTXO age distribution bands. The persistent accumulation trends is taking place amidst a backdrop of dwindling supply, with large entities withdrawing coins from exchanges.

The coloured bands in the chart below show the relative fraction of bitcoin in existence that was last transacted within the specified time frame. The 1y-2y band historically tends to indicate periods of accumulation during cyclical bitcoin bottoms. In August 2021, it fell to 9.5%, and has since expanded to 20% (since August 2022). Similarly, a longer-term cohort of holders (3y-5y) fell to 11%, then ballooned to $13.9% in that same period.

3y-5y, 1y-2y HODL Waves. Source: Glassnode

Bitcoin investors with a long-term time horizon accumulate the most amount of bitcoin during bear markets, historically. The trend is evidenced by the expansion and contraction of long-term HODL bands. This was the case in September 2020, March 2019, January 2017, February 2015 and July 2012. All accumulation periods were eventually followed by a bull run – the latest (Sept. 2020) marking a 600% increase as measured by the $69,000 all-time high.

The on-chain data is confluent with increasing illiquid Bitcoin supply. In December 2022, it was revealed that Bitcoin’s illiquid supply (the lack of coins available on the market) was on the rise. In other words, even less capital is needed to move the market in 2023. In Dec. about 78% of Bitcoin’s total circulating supply turned illiquid

Whale withdraws $120 million worth of BTC from Gate.io

At the same time, Bitcoin on exchanges has plummeted, per data from cryptoquant. The trend continued on February 4th, when a single entity withdrew over $120 million in Bitcoin from Gate.io, registering the second largest withdrawal in the exchange’s history.

Approximately 10,000 Bitcoin were removed from exchanges over the weekend. At the time of writing, 2.13 million BTC sit on exchanges, the lowest level in five years. Gate.io has 11,000 Bitcoin left on its reserves.

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