Illiquid Supply Metrics and Drivers
Bitcoin’s illiquid supply coins held in wallets with minimal spending history reached a record 14.3 million BTC in September 2025, representing approximately 72% of the circulating supply. This surge reflects intensified accumulation by long-term holders (LTHs) and institutional players, who are absorbing nearly 300% of the annual mined Bitcoin supply. Medium-sized holders (100–1,000 BTC) added roughly 65,000 BTC in a single week, underscoring their role in reducing exchange liquidity and reinforcing holding behavior.
Institutional demand, particularly through U.S. spot Bitcoin ETFs, has further tightened supply. Corporate treasuries and ETFs now hold over 2.88 million BTC, a 30% increase since January 2025 . Fidelity projects that by 2032, illiquid supply could reach 42% of the total Bitcoin supply, fundamentally altering price discovery mechanisms by reducing sell-side pressure and enhancing scarcity-driven valuation models.
Implications for Markets, Product, and Compliance
The decline in liquid supply amplifies price volatility during capital inflows or outflows, as thinner exchange order books exacerbate market moves. Derivatives markets may experience higher funding rates and margin requirements, particularly during periods of rapid liquidity shifts.
Growing institutional participation escalates demand for robust custody solutions, KYC/AML protocols, and transparent reporting frameworks. Concentration risk also increases, as large holders and ETFs wield greater influence over market dynamics, necessitating closer monitoring by compliance teams.
The upcoming Bitcoin halving in March 2028 will reduce issuance, potentially intensifying the price impact of illiquid supply trends. Market participants should prioritize tracking ETF flow data, large wallet movements, and regulatory developments to navigate evolving liquidity conditions.
In summary, Bitcoin’s illiquid supply milestone signals a structural shift toward institutional-driven scarcity, with profound implications for volatility, product development, and regulatory compliance.
