Fidelity Predicts 42% of Bitcoin Supply Will Be Illiquid by 2032 - Here’s Why It Matters
Bitcoin's liquidity crisis accelerates as institutional adoption skyrockets.
Fidelity's latest analysis sends shockwaves through crypto markets—projecting nearly half of all Bitcoin will become untouchable within the next decade. The numbers don't lie: 42% of supply gets locked away by 2032 as ETFs, sovereign wealth funds, and long-term holders hoard the digital gold.
The Great Bitcoin Squeeze
Supply shocks aren't theoretical anymore. Wall Street's embrace creates permanent holders who treat Bitcoin like a strategic reserve asset—not a trading vehicle. Traditional finance finally understands scarcity, even if they still can't explain blockchain to their golf buddies.
Liquidity vanishes while demand explodes. Price discovery becomes brutal when available coins dwindle and new buyers keep arriving. This isn't speculation—it's mathematics meeting adoption.
Welcome to the institutional era, where your Bitcoin might be worth millions but good luck finding someone willing to sell theirs. The ultimate irony? Finance giants creating the very supply crisis they once mocked crypto bros for predicting.
Bitcoin illiquid supply has grown for over a decade
According to Fidelity, the first cohort, or long-term BTC holders’ share of Bitcoin that has not moved in seven years or more, has increased every single quarter since 2016. The investment firm places these coins with the dimmest chance of reappearing in active trading.
The second cohort is publicly traded companies with at least 1,000 BTC on their balance sheets. Fidelity explained that this group has experienced only one quarter of net outflows since 2020.
Publicly traded companies now collectively control over 969,000 Bitcoin, which is about 4.61% of the total supply, and 97% of all publicly held Bitcoin, per data from Bitbo.
As reported by Cryptopolitan yesterday, Michael Saylor-led Business intelligence company Strategy (previously MicroStrategy) added 525 BTC in the past week and is the largest corporate Bitcoin holder in the world with 638,985 coins ($73.4 billion estimated value).
Just 30 companies account for the majority of publicly held BTC, consolidating control among a small set of institutions. Fidelity’s analysis forecasts that together these groups will control more than six million Bitcoin by the end of 2025, or 28% of the total supply that will ever be mined.
By mid-2025, Bitcoin’s circulating supply stood at 19.8 million coins, and the corporate cohort hasn’t stopped adding coins to their treasuries.
“Of that, we estimate that nearly 42%, or over 8.3 million Bitcoin, will be considered illiquid by Q2 2032,” Fidelity research analyst Zack Wainwright wrote.
The asset manager reiterated that this projection is based on future acquisitions by corporations within the current pattern, meaning actual illiquid supply could go up or slump if institutions change their accumulation rates.
Long-term holders mull bull season
Fidelity’s theory of long-term holders keeping their holdings in “cold storages” is debatable, considering what other analysts who watch the sell-hold cycle of long-term holders more closely are saying.
Michael Nadeau, founder of The DeFi Report, observed that long-term holders are once again releasing coins back into circulation in Q3 2025, a much similar trend to other previous bull markets.
In a post on X, Nadeau noted that during the 2021 market cycle, long-term holders reduced their share of BTC by 13.5% between November 2020 and March 2021, selling into the “true” top in April 2021. Afterward, they began to reaccumulate, ending that cycle with more coins than they had at the start.
Bitcoin long-term holders are distributing tokens back into the market for the 3rd time this cycle.
What's more interesting is what we can learn from the initial distribution phase in each cycle and how that impacted price action at the *end of the cycle.*
In the '21 cycle, LT… pic.twitter.com/99pWYCG4zK
According to Nadeau, sharing several charts from Glassnode on X late Monday, long-term holders have now reduced their holdings by 12.4% leading into the first-quarter peak of 2025, suggesting that the “first true top was in Q1.”
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