Institutions are turning Bitcoin into a long-term holding, predicting a significant increase in illiquid supply

Fidelity Predicts Bitcoin’s Illiquid Supply to Climb to 8.

by 2032

According to a new outlook from Fidelity Digital Assets, the amount of

held in inactive accounts could see a significant uptick, possibly reaching 8.3 million coins by 2032. This estimate stems from patterns such as increased institutional involvement, a rise in long-term holding, and the overall maturing of the crypto sector. The report points to Bitcoin’s growing status as a store of value and its broadening institutional acceptance as central reasons behind the anticipated surge in illiquid supply.

Illiquid supply refers to assets stored in wallets that are seldom traded, including retirement accounts, institutional holdings, and private fortunes. This is in contrast with liquid supply, which is readily available for buying and selling on exchanges. An increase in illiquid supply typically reflects stronger confidence in an asset’s future, as holders prefer to retain rather than trade it. The forecasted growth matches industry-wide movements, like a drop in short-term speculation and a greater incorporation of Bitcoin into mainstream investment portfolios.

The report from Fidelity also spotlights a transition in investor attitudes—especially among institutions—toward seeing Bitcoin as a long-term strategic asset. This is evident in more firms setting aside part of their treasury reserves for Bitcoin and the rollout of regulated products such as Bitcoin ETFs. Such advancements are expected to push Bitcoin further toward being a long-term holding, thereby swelling its illiquid supply.

The forecast’s ramifications go beyond just Bitcoin’s market structure. With a rising illiquid supply, there could be less Bitcoin available for immediate trading, which may help temper short-term volatility. This shift could change how the market operates, with fewer coins available to fuel sudden price movements. Experts believe this could bring about a more stable and sophisticated market, possibly drawing in more institutional and everyday investors.

Nonetheless, the report recognizes ongoing challenges, such as regulatory uncertainties and the necessity for enhanced infrastructure to support Bitcoin’s use as a long-term investment. Clarity from regulators will be crucial in determining how swiftly institutions embrace Bitcoin in their portfolios. Additionally, advancements in custody solutions, trading systems, and financial products will be essential for the shift from liquid to illiquid Bitcoin.

Even with these obstacles, the projection highlights a major transformation in Bitcoin’s role within global finance. As more institutions come on board and investor perspectives shift toward the long term, Bitcoin’s illiquid supply is poised to expand, solidifying its standing as a lasting and credible asset class.