Bitcoin’s real float is quietly shrinking while demand tailwinds build—a recipe for outsized moves. Fresh analysis from Fidelity Digital Assets suggests more than 8.3 million BTC—about 42% of projected circulating supply—could be effectively illiquid by Q2 2032. Even now, so‑called diamond hands and public companies already command 6M+ BTC into year‑end 2025, compressing tradable supply just as 95% of total coins will soon be mined. The upside: stronger scarcity. The risk: when whales do sell, the shockwaves travel fast.

The Scarcity Setup

Fidelity defines two sticky cohorts: coins that haven’t moved for 7+ years, and public companies holding at least 1,000 BTC. The long‑term-holder cohort has shown no net decline since 2016, steadily rising each quarter. On the corporate side, just 30 entities concentrate roughly 97% of public-company holdings—over 830,000 BTC as of June 30, 2025—part of nearly 1M BTC held by 105 public firms overall. Illiquidity has accelerated since Q3 2024, powered by treasury adoption.

Fidelity’s methodology requires at least four years of data and a 90%+ rate of quarter‑over‑quarter balance increases, and it excludes future corporate adoption from the 2032 projection. Notably, estimated 1.1M BTC linked to Satoshi sits within the long‑term illiquid bucket. The combined illiquid groups held over $628B in BTC at an average entry near $107,700 as of June 30, 2025.

Why It Matters for Traders

When more coins are locked away, the tradable float tightens. That can amplify both rallies and drawdowns as marginal flows move price further through thinner order books. Fidelity frames this as a potential “new scarcity era,” especially as the market digests a world where most BTC are already in circulation. For active traders, regime changes in liquidity often shift how breakouts, mean reversion, and volatility clustering behave.

Risks You Can’t Ignore

Illiquidity does not mean price only goes up. July 2025 saw 80,000 “ancient” BTC sold (10+ years dormant), and BTC still slipped about 2% to roughly $116,000—a reminder that large unlocks can shock the tape. Public-company treasuries also reduced holdings in Q2 2022 during risk‑off, showing that “sticky” supply can unstuck under stress. Regulatory surprises, miner distribution into strength, and derivatives/ETF flow reversals are additional pressure points. Fidelity even flags potential spikes above $124,000—but the path won’t be linear if whale supply surfaces.

Actionable Playbook

• Track on‑chain illiquidity: monitor 7y+ unmoved supply, Illiquid Supply growth, HODL Waves, and Liveliness. Rising illiquidity supports trend; flattening or declines warn of distribution.
• Set whale alerts: follow large dormancy breaks (e.g., coin‑days destroyed, ≥5k BTC on‑chain moves) to front‑run liquidity shocks.
• Map liquidity: identify thin order‑book zones above/below price to plan laddered bids/offloads rather than all‑in orders.
• Watch corporate flows: scan earnings (10‑Q/8‑K) and treasury updates for adds/cuts; a few firms control a meaningful share of public holdings.
• Use options for tails: collars or put spreads can hedge against sudden supply events without giving up all upside.
• Respect regime markers: confirm breakouts with ETF net flows, funding, and basis; fading moves in a shrinking float regime can be costly.
• Anchor to cohort cost: observe market behavior around ~$107,700 (illiquid cohort’s average); acceptance above may reinforce diamond‑hand conviction, while sustained rejection raises distribution risks.

Bottom Line

Illiquidity is building a powerful scarcity backdrop—but it cuts both ways. Expect stronger trend persistence punctuated by sharper shakeouts when dormant supply wakes up. Trade the regime you’re in: monitor on‑chain supply, whale activity, and corporate flows, and keep tail‑risk hedges ready.

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