How concentrated is the bitcoin supply?
Big whales small fish: according to data from Glassnode, Bitcoin Supply is more widely distributed than assumed. Of whales and crabs.
Those who had the pleasure of learning about Bitcoin in its early days had the opportunity to accumulate BTC at low prices. Often, this raises the question of fairness. Is it a problem if a few hodlers hold a Bitcoin Circuit big piece of the pie? And how distributed is the Bitcoin supply? A look behind the scenes of the blockchain provides insight.
Tear-jerking headlines like this miss the truth. Contrary to what Bloomberg portrays, 95 percent of BTC supply is not accounted for by just 2 accounts. In truth, Bitcoin is much more widely distributed.
If one takes into account the BTC stored at the various addresses, for example, the picture becomes very distorted. After all, Bitcoin exchanges, for example, store immense amounts of digital gold on a few addresses. But to claim that these assets belong to individual players is simply wrong. Exchanges have millions of customers whose BTC assets are bundled and stored in cold storage. If you only look at the blockchain superficially, it looks as if the entire digital gold treasure is controlled by a single player. The Binance Cold Wallet (34xp4vRoCGJym3xR7yCVPFHoCNxv4Twseo), for example, controls 143,528.45 BTC with a total value of 8.3 billion US dollars.
According to the onchain analytics service Glassnode, a completely different picture emerges if all Bitcoin addresses are clustered using statistical methods and combined in such a way that they can be assigned to individual users. In reality, the supply is much more widely spread than market observers like Bloomberg report. According to Glassnode, whales control „only“ 31 percent of the bitcoin in circulation. Glassnode defines whales as entities that hold more than 1,000 BTC. Since the data specialists did not include exchanges and miners in their study, institutional investors such as MicroStrategy, Tesla and Square are most likely to be included.
Hodler play bigger role than previously thought
To be sure, whales still play an undeniably large role in Bitcoin land. However, the importance of hodlers is admittedly on the rise.
Smaller instances holding up to 50 BTC each (Shrimp, Crab and Octopus) control almost 23 percent of the supply. This shows that a considerable amount of Bitcoins is in the hands of small investors,
the study says.
In addition, the number of small fish significantly exceeds that of large whales. This and the fact that the tendency towards a broader distribution is steadily increasing shows the potential market power of Hodlern.
5/ Below are the number of estimated network participants in each bucket.
Not much surprises there, the distribution is heavily skewed towards small #Bitcoin holders. pic.twitter.com/tH8MfhhFXQ
– Rafael Schultze-Kraft (@n3ocortex) February 2, 2021
Because while the amount of Bitcoin held in the crab and shrimp cluster has increased by 130 percent since 2017, whales have seen their BTC position decrease by as much as 7 percent over the same period.
The whole thing is especially bullish for Bitcoin because retail investors in the Bitcoin market are known to display a hodl mentality. The more shrimps, crabs and octopuses holding Bitcoin, the better.