Bitcoin Hot Supply Is Down To Just 2.8% Now

According to data from the on-chain analytics firm Glassnode, the Bitcoin Hot Supply has significantly gone down over the last three months.

On-chain data shows that the Bitcoin Hot Supply metric has observed a sharp drop recently. Here’s what this could mean for the cryptocurrency.

Bitcoin’s ‘Hot Supply’ Drops To 2.8%

According to on-chain analytics firm Glassnode, the Bitcoin Hot Supply has seen a substantial decrease.

The “Hot Supply” is an indicator that tracks the portion of the circulating tokens that last saw an on-chain move within the past week. This portion of the BTC supply is considered its most liquid, with coins part of it being quickly passed around.

The analytics firm shared a chart that shows how this supply has changed for the cryptocurrency over the last couple of years.

As displayed in the graph, the Bitcoin Hot Supply clocked highs during the bull rally from last year, meaning that there was a large amount of constant trading going on. However, with the bearish shift that has occurred in the last few months, the indicator’s value has seen a significant decline.

In total, the metric has decreased by more than 50% in the past three months, going from highs of 5.9% to just 2.8%. According to Glassnode, this signals a sharp reduction in liquid BTC available for trade.

Another indicator that would corroborate this trend is the Exchange Inflow, which measures the total amount of the asset that the investors are transferring to wallets attached with centralized exchanges. Generally, the holders deposit their tokens to these platforms for selling-related purposes, so the Exchange Inflow can be considered as a gauge for the sell-side activity in the sector.

Here is a chart for the Bitcoin Exchange Inflow, which displays how the metric’s value has changed during the last couple of years for the various cohorts:

During the rally, the Bitcoin Exchange Inflow had a value of 58,600 BTC per day, meaning the exchanges were receiving deposits amounting to 58,600 tokens every day. Today, as the market activity has cooled off, the indicator has declined to 26,900 BTC per day. According to the analytics firm, lower inflows indicate reduced sell-side activity but also weaker demand.

The spot market isn’t the only one that has seen reduced trading activity, as Glassnode has pointed in another X post that the Futures Open Interest, a measure of the total amount of futures positions related to Bitcoin currently open on exchanges, has also witnessed a notable drawdown since the price all-time high (ATH).

The Bitcoin Futures Open Interest was at $57 billion at the ATH, but now its value has plunged to $37 billion, representing a drop of 35%. According to the analytics firm, this decline mirrors the contraction seen in on-chain liquidity, pointing to broader risk-off behavior.