More than 60% of all bitcoins produced are stored as digital gold

Only 3.5 million bitcoin or 19% of circulating supply is traded throughout the world, while the rest is being held long-term by investors.

11.4 million Bitcoin is held by long term investors, diminishing the tradeable supply to only 20% of the total Bitcoin supply.

According to Chainalysis, 60% of all bitcoins are at the hands of long-term investors, 20% other coins are actively traded and another 20% were irrevocably lost.

The researchers included those owners of the first crypto currency, who never reduced their position by more than a quarter. Lost bitcoins received this classification if they are stored at inactive addresses or forgotten wallets for over 5 years, including those owned by Satoshi Nakamoto.

Of the 3.5 million bitcoins actively traded, 96% exchanged by retail traders, to which Chainalysis refers those whose transactions in value terms do not exceed $10 000. According to analysts, since 2018, 83% of all transfers in this category crypto exchanges were in the amount less than $1000.

“Retail traders, whom we categorize as those who deposit less than $10 000 USD worth of Bitcoin on exchanges at a time, appear to be the larger majority, accounting for 96% of all transfers sent to exchanges on an average weekly basis. Professional traders, however, control the liquidity of the market, accounting for 85% of all the USD value of Bitcoin value sent to exchanges.

According to the researchers’ calculations, out of 340 000 weekly active Bitcoin traders for which Chainalysis was able to obtain information, 4% or about 14 200 trade 85% of all BTCs that are stored in the crypto wallets of exchanges.

Chainalysis estimates that 60% of the bitcoins that are not lost are stored in a licensed custodial service or virtual asset service provider (VASP) under FATF terminology. This share has steadily increased over time, reflecting the growth of custodial crypto companies as Bitcoin has become popular.

The growing dominance of VASP confirms the fact that of the remaining 40% of available bitcoins that are not related to custodial services, 87% were related to them in one way or another in the past. They were either stored there or purchased.

According to researchers’ calculations, from 2018 on Binance, Huobi, Coinbase and Bitfinex accounted for 40% of all bitcoins received by cryptocurrency exchanges in 2020. The next ten platforms received a combined 36%, with the remaining 24% of the transfer volume distributed to hundreds of smaller industry players.

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