Last time Bitcoin saw current price levels was on its way downwards in August 2018. But the landscape of Bitcoin supply holdings has shifted ever since the most recent bottom was met this past Christmas. The number of addresses holding between 1000 and 10K Bitcoins each has seen a steep rise with a whopping accumulation of 450,000 Bitcoins in less than 9-months.
Over 26% of circulating supply, $36Bn worth of Bitcoin, now sit in addresses that have a balance of 1000-10k BTC. In August 2018 when Bitcoin was also at $8000, these ‘Firm Size’ addresses held under 20% of the circulating supply showing a sharp accumulation of nearly 7% in less than a year.
With that said, a surge in the 1-10k Bitcoin address bracket in December 2018 was likely the result of Coinbase shifting approximately 5% of supply into new cold storage security facilities.
At the time, Coinbase moved 856,000 Bitcoins across 107 addresses. These now stand at 11% less with 760,000 Bitcoins in 96 addresses. Diar has excluded these Bitcoins from this analysis.
|| BOTTOM BUY-IN
The number of Bitcoins held by this ‘Firm’ size bracket, seeing as the minimum address now accounts for multi-millions, surged in December 2018 when the largest cryptocurrency met its most recent bottom of $3200. Since December 2018, in a short six month period, Bitcoin accumulation has seen over 1.2Mn added to this bracket, by and far the largest growth across all address groupings (see chart 1).
And while accounting for potential Coinbase-held coins brings the tally down, the 450k that has been added remains leaps and bounds of growth against every other segment.
|| BILLIONS ADDED
These addresses stand today at $6Bn more (excluding Coinbase coins) than the last time Bitcoin was at $8000 in August 2018. And these are not stale addresses or lost bitcoin as most have been active in the past three months.
Since the start of 2019, over 100K Bitcoins have found their way into this bracket. And while this only accounts for 40% of newly minted Bitcoins this year, there has been a 10% increase in the number of addresses. Whether or not these are multiple entities or for the sake of security management is, of course, an unknown.
But what is notable is the long-term trend that on-chain data shows since the start of the bear market in January 2018. Since then, 955k Bitcoins have been minted through inflation as a reward to miners. For the same period, firm size addresses have slurped up half the new market supply.
|| RETAIL STEADY
Retail size wallets between 0-100 Bitcoins have also seen a 126k increase in Bitcoins and a continuous upward trend to the number of addresses (Diar, 25 February). Overall, these addresses hold, as of date, 38% of Bitcoins circulating supply (see chart 4). Accounting for inflation, however, this segment remains fairly stable and unlikely the driving cause of recent price spikes.
|| SUPPLY SQUEEZE ON TRADING VENUES?
Bitcoins held by major addresses – mostly of which are exchanges – have seen an exodus of over 300K Bitcoins since the start of 2018. At peak, these addresses held 750,000 more Bitcoins than they do today, 21% of the total circulating supply versus 16% today (see chart 4).
Had Coinbase wallets before its security migration fell in these higher brackets, then it would effectively be a wash despite seeing nearly 100k Bitcoins out of their cold storage.
But with trading volumes hitting new highs this year, recent surges in prices could have added to the effect in part been due to the now restrained supply on exchanges as far as on-chain data can tell (Diar, 21 May).