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Who owns bitcoin?
The Bitcoin public ledger comes with a unique level of transparency that includes critical information detailing where the bitcoins are being provided. With the help of address tracking, public announcements, and some estimates across data sources, we can get a sense of where roughly 47% of the total bitcoin supply is located today. It is estimated that a large portion of the 21 million bitcoin supply is lost, including Satoshi Nakamoto’s coins. There is useful data from both glass And decomposition To point to the loss of nearly 4 million bitcoins.
Other large amounts of bitcoin are on exchanges, in the Grayscale fund, or in bitcoin mining wallets. Large swathes of bitcoin have been accumulated by the likes of MicroStrategy and, more recently, Tether. About 5,500 bitcoins are locked up on the Lightning Network, while other amounts are in the form of Bitcoin (WBTC) on block chains besides Bitcoin.
Most bitcoin estimations can be tracked on a routine basis when looking at examples, such as known chain addresses linked to the US government from various bouts of bitcoin, or when analyzing monthly production updates from public bitcoin miners, while other holding details can be much trickier. Come here. A private institution may have referenced its bitcoin holdings years ago, but it is not required to publicly announce updates to its cache. Other examples include the uncertainty of government holdings. China may have 194,000 bitcoins of seizure, but it is difficult to verify whether that number is current.
All that said, the graph below is a rough cross-section of the available data that can be expanded and refined for better accuracy across the different groups. These numbers come from on-chain forensics, public SEC filings and balance sheet certifications.
Of the 2.3 million bitcoins on exchanges, the majority are on Binance and Coinbase. This wouldn’t include bitcoin in investment custody products like Grayscale and Coinbase Custody, for example. Binance’s share of bitcoin on exchanges has risen from less than 10% in 2019 to 30% today. The company is estimated to have approximately 700,000 bitcoins on its platform, which can mostly be attributed to its derivatives market dominance and international presence, while Coinbase is primarily a spot exchange with a heavy US presence.
Over time, the supply of bitcoins traded on exchanges reached 17.5% of the circulating supply, reaching its peak in March 2020 before dropping to just 11.89%. We suspect that the trend of declining bitcoin on exchanges as a percentage of circulating supply will continue as bitcoin is distributed across a growing number of global adopters, thanks to cutting-edge personal custody solutions that are becoming more widespread and powerful with time.
In absolute terms, there has never been such a level of long-term Bitcoin holders. Relatively speaking, the only two times in history that I got a larger share of long-term coins were in 2009 before bitcoin even had an exchange rate, and in the depths of the 2015 bear market. With so much supply out of the market, sideways pressure could trigger Selling in the meantime leads to significant price adjustments to the downside, given that many market participants participate in a more passive role.
We can also look at the illiquid supply of bitcoin to determine the carrier dynamics. The term “illiquid supply” refers to bitcoins held by entities that rarely sell, meaning that these coins are not readily available for trading. To estimate this, an entity’s bitcoin holdings are considered illiquid if less than 25% of the bitcoins received are spent, liquid if 25% to 75% are spent, and highly liquid if more than 75% are spent.
In the post-2016 halving era, the illiquid supply of bitcoin as a percentage of circulating supply was at an all-time high, with holders accumulating coins from the market faster than issuing miners could distribute them.
As of April 2023, the illiquid supply of bitcoin has exceeded 15,000,000 coins.
The trend is clear: Bitcoin continues to be distributed into the hands of more, with a greater concentration of supply shifting from entities holding large amounts of Bitcoin – 1,000-10,000 BTC balances, 10,000-100,000 BTC, more than 100,000 BTC – to entities with balances. 10 bitcoins or less.
It is important to note that entities that hold large amounts of bitcoin, especially those with more than 10,000 bitcoins, potentially manage keys for thousands or even millions of users, exchanges being an obvious example. This is often a classic source of mischaracterization and misinformation when people make claims about the lack of wealth distribution from Bitcoin. Yes, there are groups of addresses with large holdings of bitcoin, but that is like claiming that one company owns 14% of all US dollars in the commercial banking system. While JPMorgan Chase has $2.4 trillion out of the $17.1 trillion in deposits in local banks and deposits are the responsibility of JPMorgan, in fact, they are held by millions of unique individuals and companies.
The main difference – apart from the legal ownership structure vs. the crypto one – is the fact that Bitcoin’s ownership structure, the UTXO group, is more transparent and easily auditable. This makes it easy for anyone to look at the data and make informed claims about the concentration of the bitcoin supply.
One last note
Bitcoin has successfully attracted a wide range of holders, from individuals to corporations, private entities, and even nation-states. As evidenced by increased retail ownership and historically high levels of long-term coin holders, it is clear that bitcoin supply is more evenly distributed across this broad group of adopters. This trend is being reinforced by a decrease in the amount of bitcoin held on exchanges and an increase in illiquid supply.
Going forward, we expect these trends of increasing distribution and decreasing concentration to continue as the stable supply of 21 million bitcoins is divided among the individuals, institutions, corporations, and nation-states of the world.
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