The cryptocurrency market is still experiencing significant downturns, yet there may be emerging indicators that Bitcoin (BTC) could be on the brink of recovery. One key factor to consider is the asset’s hot supply, which quantifies the amount of BTC currently available for trading.
Recent insights from the on-chain intelligence platform Glassnode reveal that Bitcoin’s Hot Supply, a metric indicating the volume of BTC that is aged ≤1 week, has plummeted by 50% over the past three months. This dramatic decline has reduced the percentage of coins aged a week or less from 5.9% to 2.8% of Bitcoin’s circulating supply.
#Bitcoin’s Hot Supply metric, which tracks coins aged ≤1 week, has contracted from 5.9% to 2.8% of circulating supply – a 50%+ decline over the past 3 months. This signals a sharp reduction in liquid $BTC available for trade: https://t.co/VVw6YXRDHS pic.twitter.com/dfmTOyg5yr
— glassnode (@glassnode) March 20, 2025
Bitcoin’s Hot Supply Has Dropped
A reduction in Bitcoin’s hot supply can signify both bullish and bearish conditions. On the bullish side, fewer BTC being actively traded can indicate a variety of scenarios, including increased holding behavior, market stability, or the potential for a supply shock.
When investors choose to hold on to their assets rather than engage in short-term trading—especially in the current poorly performing crypto market—it often signals a bullish mindset. Investors may be anticipating future price increases, reflecting confidence in Bitcoin’s long-term value.
Moreover, a decline in hot supply tends to lead to lower market volatility. With fewer bitcoins changing hands, the likelihood of sudden price movements diminishes, contributing to a more stable environment conducive to price recoveries and potential rallies in the medium term.
As the supply of actively circulated Bitcoins decreases, the overall availability for trading diminishes. In an environment of stable or increasing demand, a constricted hot supply can trigger a supply shock that may positively impact Bitcoin’s price. However, it is crucial to highlight that for such a supply shock to occur, demand must also be high—which is currently a concern.
Bullish or Bearish?
The data from Glassnode also indicates that Bitcoin is witnessing weaker demand relative to three to four months ago. This trend is illustrated by a noteworthy decline in Bitcoin inflows to exchanges, which have decreased by 54%, dropping from 58,600 BTC per day to 26,900 BTC.
This drop in exchange inflows aligns with diminishing investor sentiment and capital flows. Spot Bitcoin exchange-traded funds (ETFs) have experienced significant daily outflows recently, underscoring a notable lack of demand.
Conversely, it is worth mentioning that these ETFs have recorded a few days of inflows this week, suggesting that demand may be on the mend. Thus, the pronounced decline in Bitcoin’s hot supply might ultimately indicate a bullish trend.
The discussion surrounding Bitcoin’s changing hot supply will continue to evolve as market dynamics shift. Investors and analysts alike should monitor these indicators closely to gauge the potential trajectory of Bitcoin in the coming months.
The original article on this topic is available here.
