Who has bitcoin? A Closer Look at the Bitcoin Supply

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Who holds bitcoin?

Bitcoin’s public ledger comes with an unparalleled level of transparency including key information on where the bitcoin supply resides. With the help of address tracking, public announcements, and some estimates in data sources, we can get a sense of where roughly 47% of the total bitcoin supply is today. A large portion of the 21 million supply of bitcoins estimated to be lost includes Satoshi Nakamoto’s coins. have useful data from both glassnode And Chainalysis To suggest that around 4 million bitcoins have been lost.

Other large amounts are on bitcoin exchanges, in the Grayscale Trust, or in the wallets of bitcoin miners. Swathes of bitcoin have been held by the likes of MicroStrategy and more recently Tether. Some 5,500 bitcoins are locked on the Lightning Network, while other amounts exist as wrapped bitcoins (WBTC) on the blockchain other than bitcoin.

Most bitcoin estimates can be tracked on a regular basis when looking at examples, such as on-chain addresses associated with the known US government from various bitcoin seizures, or when analyzing monthly production updates from public bitcoin miners, while other holding details are much less detailed. can be difficult. come by. A private institution may have indicated bitcoin holdings years ago, but is not required to publicly announce updates to their stash. Other examples include the uncertainty around government holdings. China may have 194,000 bitcoin Seizure, but it is difficult to verify whether this number is operational or not.

All that said, the chart below is a rough cut of the available data that could be expanded and improved upon for better accuracy across different groups. These figures come from on-chain forensics, public SEC filings, and balance sheet verification.

Most of the 2.3 million bitcoins on exchanges reside on Binance and Coinbase. For example, it will not include bitcoin in investment custody products such as Grayscale and Coinbase Custody. Binance’s share of bitcoin on exchanges has grown from less than 10% in 2019 to 30% today. The company estimates that they hold around 700,000 bitcoins on their platform, which can be largely attributed to their dominance of the derivatives marketplace and their international presence, while Coinbase is primarily a spot exchange with a heavy US presence.

Over time, the amount of circulating bitcoin supply on exchanges has grown to 17.5% of the circulating supply, reaching its peak in March 2020 before falling to just 11.89%. We suspect that the declining trend of bitcoin on exchanges as a percentage of circulating supply will continue as bitcoin gains global adopters, with sophisticated personal custody solutions becoming more mainstream and robust over time. Are.

In absolute terms, bitcoin has never had this level of long-term holders. Relatively speaking, only twice in history have long-term holders with a sizable portion of the coin fallen before bitcoin’s exchange rate in 2009 and in the depths of the 2015 bear market. With such excess supply from the market, selling pressure in the interim could result in larger price adjustments to the downside, as many market participants are taking a more passive role.

We can also look at the illiquid supply of bitcoin to measure holder dynamics. The term “illiquid supply” refers to bitcoins that are held by entities that rarely sell, meaning that these coins are not readily available for trading. To quantify this, an entity’s bitcoin holdings are considered illiquid if less than 25% of its received bitcoins have been spent, liquid if 25% to 75% have been spent, and highly liquid if more than 75%. spent more.

In the post-halving era of 2016, bitcoin’s illiquid supply as a percentage of the circulating supply is at its highest level, with holder accumulation taking coins out of the market faster than miners can distribute them. Are.

As of this April 2023, the liquefied supply of bitcoin will exceed 15,000,000 coins.

The trend is clear: bitcoin continues to be distributed into more hands, with a greater concentration of supply from institutions holding large amounts of bitcoin – 1,000–10,000 BTC, 10,000–100,000 BTC, and entities holding balances greater than 100,000 BTC. For 10 BTC or less.

It is important to note that entities holding large amounts of bitcoin, especially those with more than 10,000 BTC, are likely managing keys for thousands or even millions of users, with exchanges being an obvious example. When people claim about bitcoin’s lack of wealth distribution it is often an excellent source of misinformation and misinformation. Yes, there are clusters of addresses with large holdings of bitcoin, but that’s like claiming that one corporation owns 14% of all US dollars in the commercial banking system. While JPMorgan Chase holds $2.4 trillion of the $17.1 trillion in deposits in domestic banks and deposits JPMorgan owes, in reality, they are in custody for millions of unique individuals and businesses.

The main difference – apart from fiat versus cryptographic ownership structure – is the fact that bitcoin’s ownership structure, the UTXO set, is more transparent and easily auditable. This makes it easy for anyone to look at the data and make an informed claim about bitcoin supply concentration.

last note

Bitcoin has been successful in attracting a broad spectrum of holders, from individuals to corporations, private entities and even nation-states. As evidenced by the rise in retail ownership and historically high levels of long-term holders, it is clear that the supply of bitcoin is becoming more evenly distributed across this vast array of adopters. This trend is further reinforced by the decreasing amount of bitcoin held on exchanges and the increasing illiquid supply.

Going forward, we expect these trends of increasing distribution and declining concentration to continue, as the 21,000,000 hard capped supply of bitcoin is divided among the world’s individuals, institutions, corporations, and nation states.

That concludes the excerpt from the most recent edition of Bitcoin Magazine PRO. Subscribe now To get pro articles straight to your inbox.

Relevant previous articles:

• Pro Markets Keys of the Week: Tether’s Huge Treasury Portfolio
• Before You Think: An Objective Look at Bitcoin Adoption
• One Year Until the Bitcoin Halving: An Analysis of Holder Dynamics
• Bitcoin sellers liquidated, hoarders hodl line