People aren’t spending their bitcoins. The big orange chunk shows Bitcoin holders who bought their bitcoins at the peak of the bubble last year, and are now presumably holding on because they don’t want to realize their losses.

Fewer than 5% of bitcoins turn over each day. For comparison, the daily foreign exchange turnover for the US Dollar is $4.6 trillion, and the total US Market Cap is $22T. That is what a liquid market looks like.

See Also:
Some guy on Reddit did an analysis of how frequently bitcoins turn over.