While volatility has returned to global financial markets, only about one in four Bitcoins that have not been extracted recently has moved between anonymous online addresses that have held them over the past six months.
This is a huge change since the end of 2017, when about half of all these Bitcoins were active, according to data compiled for Bloomberg News by the researcher Coin Metrics. Bitcoin has not reached such low levels of activity since 2015, before the massive inflow of investors that hit the cryptocurrency during its record price dating back to the end of last year, said Coin Metrics.
"He tells me we're still in a Bitcoin recession," he said in a telephone interview Nic Carter, co-founder of Coin Metrics, based in Cambridge, Massachusetts.
About 50% of the Bitcoins – not including the newly extracted coins – have been moved in the last 12 months, down from around 60% at the end of 2017, according to Coin Metrics. There are about 17 million Bitcoins. Due to the rules governing the extraction process, in which new coins are granted for the completion of the transactions, only another 4 million will be issued.
The reduction in activity is all the more surprising considering that many new investors, especially speculators, jumped at the end of last year, when the price of Bitcoin reached a record high of almost $ 20,000. Many of these investors bought hoping to make a quick profit and were stuck with the coins when prices collapsed. The assumption is that, if the Bitcoin price reoccurs, many of them will sell. But it could be off-base.
Historical data show that a large amount of Bitcoin is never exchanged. Up to 40 percent of all Bitcoins are lost or stored in so-called cold storage estimates, counting coins. Another 25 percent to 35 percent is semi-liquid, so they only come online during bullfighting, when long-term bond holders sell their bets to cash out earnings. And during price cuts, only about 30% of Bitcoins are available, said Coin Metrics.
"I think it helps us to evaluate the" true liquidity "in the idealized, global sense of the book of orders," said Carter. "To some extent, I think it allows you to roughly calibrate the effect of future inflows."
Even though its daily trading volume is down nearly 80% from its January peak, about $ 4 billion bitcoins change hands every day, according to CoinMarketCap.com.
"That does not mean there is a liquidity problem," Gil Luria, director of institutional assets at DA Davidson & Co., Said in an e-mail. "Four billion volumes a day means that almost all investors in Bitcoin they can liquidate their entire position within one business day ".