The Great HODL: How Immobile Supply Shapes Bitcoin’s Next Real Squeeze

Bitcoin’s recent rally to around $101,000 reflects the changing on-chain landscape as previously stationary supply begins to move.

After months of steady accumulation, long-term holders have started taking distributions, ETFs have turned from inflows to outflows, and liquidity pressures are reshaping the market’s balance between supply and demand.

Beneath the surface, the data reveals a growing mechanical tension between issuance, capital absorption, and holder behavior, setting the stage for Bitcoin’s next real squeeze.

Bitcoin ranged between $99,500 and $103,000 last week, but the price has retreated from recent highs as long-held coins were moved out and new issuance met soft demand from funds, including a spate of net redemptions in early November.

The core driver is on the chain.

After months of net accumulation, around 62,000 BTC left the illiquid cohort since mid-October, marking the first significant decline in the second half of the year.

This change reflects long-term wallets achieving clustered cost-based reinforcement.

Prior to this decline, illiquid supply had increased from 14.3 million BTC to 14.4 million BTC, accounting for nearly 72% of coins in circulation and the highest share held by low-spending entities in years. As inventories ease, the free float expands and the rally stalls until demand clears excess supply.

The path from stall to squeeze is mechanical. Post-halving issuance will run at approximately 3.125 BTC per block and approximately 450 BTC per day. The fixed trickle now interacts with three moving parts: the pace of long-term holders’ distributions, the rhythm of miners’ sales, and the ability of funds and treasuries to absorb it all.

If ETF and balance sheet buyers receive more coins than issuance and distribution combined, the price will rise as the available float decreases. If there is a shortage, the price will be reduced and the exposure of the old cohort will be reduced.

Capital flows are a headwind in the short term.

US Spot Bitcoin ETF recorded huge net outflows in early November, $566 million Even after November 4th $137 million On November 5th, before the partial offset, approx. $240 million According to Pharcyde, the number of inflows on November 6th.

Multi-day redemption coming soon 2 billion dollars A cross-product analysis highlights how concentrated U.S. demand amplifies fluctuations in absorption. The breadth of demand remains important, as U.S. capital flows remain concentrated in a single large issuer. When creation stagnates there, the absorption of the collective often wanes.

Long-term actions are also beginning to take place. Glassnode’s “Week On Chain” shows the net distribution from the long-term cohort, with older slices contributing more green days to the spending age band.

Average dormancy hit a monthly high in early October, but this pattern often clusters around local highs and transitions when experienced wallets take profits. The same framework helps identify turns. As supply tightens again, past cycles have seen a decline in spending from more than a year’s worth of bands during up days before seeing new gains.

Miner activity remains small, but moves significantly when the hash price is low. Although issuance has been fixed, in late summer miners’ net position changes fell into negative territory, and in mid-October a spike in exchange transfers reappeared on the CryptoQuant dashboard.

If fees or prices drive up the hash price, distribution typically slows down, and if revenues are compressed, hedging or selling can increase outflows by 200-500 BTC per day, enough to reverse the situation if capital demand is close to equilibrium. This relationship can be tracked with changes in Glassnode’s miner net position and the hashrate index’s hash price, which fell again in November.

Cost-based rails illustrate this trend.

In previous advances, short-term holders realized that the price flipped from resistance to support as broader demand absorbed the coins distributed by the older cohort. Retrieving and holding the line after a pullback is a constructive phase, while losing it coincides with a range market as long holders continue to trim.

A simple balance sheet shows the setup at current prices. At approximately $101,000 per coin, approximately 450 BTC minted each day is equivalent to approximately $45.45 million. ETF flows can be converted to coins by dividing dollars by price, so $50 million per day is approximately 495 BTC and $200 million per day is approximately 1,980 BTC.

The recent surge in longholder distribution has been around 62,000 BTC since mid-October, averaging around 4,430 BTC per day spread over two weeks, indicating a sharp increase rather than a steady pace. The sign of net absorption, which is demand minus issuance and distribution, determines whether the float is tightened or loosened.

(Miner net was assumed to be ~0 in the baseline scenario. Sensitivity increases when daily miner outflow reaches 200-500 BTC.)

The market stall and subsequent retrace fit the bill.

Illiquidity supply decreased in October as older coins were moved out, capital demand turned negative for several sessions, and miners experienced small outflows.

This combination increases the tradeable float and limits momentum until the mix reverses. If the distribution of long-term holders slows and ETF issuance outpaces printing again, illiquid supply could rise again and prices could rise even without large new cash inflows.

According to Glassnode’s Illiquidity Supply Dynamics, a turnaround in 30-day rates would support re-accumulation, especially if US ETFs and international new listings return to consistent net creation.

Macros are still important as background. NYDIG research positions Bitcoin not as an inflation hedge, but as a barometer of liquidity responsive to the dollar and real interest rates. The global liquidity squeeze and the dollar’s strength into early November coincided with a decline in bid prices, a reminder that dollar flows towards the end of the year are still linked to flow velocity.

For traders watching the tape, the checklist is concise and easy to understand. Track changes in illiquidity supply for upside, observe realized prices for short-term holders during pushbacks, and monitor the mix of spending age bands for fade-ins of spending over a year in the green.

Additionally, daily ETF creation should be maintained next to the issuance line of up to 450 BTC per day in coin equivalent. As miners ease their distribution and the gauge improves, the float becomes tighter and range is ceded.