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The total supply losses for BTC, ETH and SOL are overstated, according to data

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Analyst Warns Bitcoin Treasury Strategy Faces 'Far Shorter' Lifespan
Analyst Warns Bitcoin Treasury Strategy Faces 'Far Shorter' Lifespan

Glassnode recently released data that showed bitcoin (BTCEtherETHSolana,SOLThe loss of this supply is a record. 

In fact, the actual liquid supply is much smaller than what the percentages suggest, in particular for Ether or Solana. 

The key takeaways

  • Over 40% of Ether (ETH) and over 75% of SOL (SOL) are locked up in ETFs or strategic reserve, and over 50% of SOL is held by staking.

  • Bitcoin’s apparent liquidity was very high. However, institutional BTC stock and BTC lost supply have reduced it significantly.

The liquidation of positions at loss does not correspond to the real supply

Bitcoin’s current 35% supply is held at a profit, the last time this happened was when BTC trades near $27,000. Bitcoin’s liquidity is lower than its numbers would suggest, even if there was no staking. Here are some key stats:

  • BTC supply: 19.953,406

  • BTC held By ETFs and public/private firms: 3,725,013 BTC

  • BTC lost forever (estimates): 3,000,000–3,800,000 BTC. This is between 15.0% and 19.0% of total supply.

Bitcoin’s supply percentage in profits is declining sharply. Source: Glassnode

These factors combined remove approximately 33% of Bitcoins from the liquid market. As they are mandated to accumulate long-term, to track indexes or to maintain reserves, institutional holdings such as corporate and ETF Treasurys do not react to the volatility of short-term prices. BTC losses further decreased the amount of supply available to react to pressures caused by price drops.

It was necessary to interpret Ether statistics in a nuanced manner. While a third of ETH currently is being held in a negative manner, a considerable portion is either locked up or held by institutions.

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Source: CryptoQuant. Source: CryptoQuant

Total, more than 40% of ETH are effectively locked away in staking or ETFs. In the past, these categories have not reacted to volatility because institutional products like ETFs and custodial reserve operate on policies that prioritize long-term accumulation over discretionary sales. The actual supply of liquid ETH that is under pressure due to loss-driven factors is much smaller than 37%.

Solana’s divergence was even more pronounced. The network is one of the most aggressive in terms of stakes, despite the fact that 70% of SOL is currently held at a deficit.

  • SOL Circulating Supply: 559 262,268

  • SOL staked411 395 790,5 SOL (73.6%)

  • The SOL ETF represents approximately 1% of the circulating supply

Cryptocurrencies, Bitcoin Price, Investments, Markets, Cryptocurrency Exchange, Tokens, Price Analysis, Market Analysis, Altcoin Watch, Ether Price, Solana, Ethereum ETF, Bitcoin ETF, ETF
Lowest SOL profit for two years. Source: Glassnode

More than 34 of SOL are locked up in institutional or validator staked products. Neither of these exhibit rapid sales behaviors. SOL was at $121, and the amount of supply that had been held in loss fell from 80% to just 80%. It reached this level when it was $20.

Because of their high stake locks, the Supply-at-Loss metrics for ETH and SOL tend to decline sharply when uptrends occur. These spikes are more a reflection of speed than panic.

The raw percentages of loss are overstating the potential pressure to sell. After accounting for locked supply, institution holdings and permanently lost coin, liquid supply is much more limited.

Related: Bitcoin data calls $80K the bottom as analysts say BTC bulls are back

The article is not intended to provide investment advice. Each investment or trading decision involves some risk. Readers should do their own research before making any decisions.