Bitcoin May Face Structural Liquidity Collapse

The most underestimated risk of bitcoin may no longer be its volatility, but its gradual disappearance from the market. A new report from Fidelity Digital Assets warns of an increasingly marked dynamic: a growing share of the BTC stock is accumulating in inactive or institutional wallets, permanently escaping liquidity. By 2032, this concentration could reach a historic threshold, redefining the available supply and market balances.

A Supply Under Pressure: 8.3 Million BTC Soon Off-Market?

While bitcoin is progressing, Fidelity Digital Assets announces in a report published this Monday that 8.3 million BTC could become “illiquid” by the second quarter of 2032, representing about 42 % of the total circulating supply.

This projection is based on observing constant accumulation behaviors from two groups considered strategic. On one hand, long-term holders, whose wallets have remained inactive for at least seven years. On the other hand, publicly listed companies each holding a minimum of 1,000 BTC.

The report specified : “we estimate that this combined group will hold more than six million bitcoins by the end of this year, representing more than 28 % of the 21 million bitcoins that will ever exist”.

Fidelity details its methodology: only addresses whose holdings increased each quarter, or in at least 90 % of cases over the past four years, were taken into account. Here are the important figures :

• Long-term holders have never reduced their BTC stock since 2016 ;

• Publicly listed companies experienced only one period of net reduction of their holdings: the second quarter of 2022 ;

• Currently, 105 public companies hold a total of 969,000 BTC, or 4.61 % of the total supply ;

• Fidelity estimates that, by the end of this year, these two groups will cumulatively hold over 6 million BTC ;

• The projection of 8.3 million illiquid BTC in 2032 does not even account for potential new buying companies.

These elements highlight a persistent accumulation dynamic, deeply rooted in the institutional and wealth-holding behaviors of the market. The concentration of supply is increasing, resulting in a scenario where the real availability of BTC in circulation could become marginal, with potentially significant effects on volatility and valuation.

A Market Under Pressure Facing an Increasingly Frozen Supply

If the projected illiquidity by 2032 raises the question of an increasingly rare bitcoin, it also raises a more pressing one: what will happen if these large holders decide to sell?

The Fidelity report reveals a striking contrast between accumulation on one side and massive sales on the other. It notes that the two identified groups now hold $628 billion in BTC, at an average price of $107,700.

This doubling valuation in one year could encourage some to secure their profits. Indeed, whales have sold nearly $12.7 billion of BTC in the past 30 days, representing the largest sell-off wave since mid-2022.

In this context, the growing concentration of BTC in a few hands becomes a volatility factor. The market, already marked by a 2 % drop in the asset price in a month, shows some vulnerability to these fund movements.

Fidelity points out that if long-term holders maintain their position, the bullish trend could be strengthened. However, even a partial strategy reversal could cause a correction.

Behind the figures, an unprecedented configuration of the bitcoin market is thus emerging. A structurally reduced supply could mechanically drive up the BTC price, provided demand follows. Otherwise, extreme concentration could generate increased volatility, even systemic instability.