Despite the rise in the number of whales in 2020, the amount of BTC in the wallets of retail investors has increased by 130% in three years.
According to Glassnode, bitcoins are relatively evenly distributed across addresses with varying balance sizes. Glassnode researchers published this data in response to previously disseminated information that the bulk of bitcoins in circulation is concentrated in a few large addresses – only 2% of wallets control 95% of BTC. While these numbers are technically correct, they are misleading because they leave out a number of important factors.
“2% of addresses control 95% of all BTC.” Not true. The BTC supply is much less concentrated than is often reported and has become more diffuse over time, ”said Glassnode CTO Rafael Schultze-Kraft.
He writes that not all BTC addresses should be treated the same:
“For example, the address of the exchange, which stores the money of millions of users, must be distinguished from an individual address … One user can control several addresses, and one address can contain the money of several users.”
Researchers analyzed Bitcoin wallets according to balances and divided them into eight distinct groups, each named after sea creatures: shrimp (<1 BTC), crabs (1-10 BTC), octopuses (10-50 BTC), fish ( 50-100 BTC), dolphins (100-500 BTC), sharks (500-1000 BTC), whales (1000-5000 BTC) and humpback whales (> 5000 BTC). Exchanges and miners were not included in the statistics and were considered separately.
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The estimated distribution of BTC among network members over time. Source: Glassnode.
As of January 2021, whales and humpback whales were the largest members of the network – these two categories controlled about 31% of the BTC supply. This is followed by fish, dolphins and sharks (50-1,000 BTC), which control about 23% of the total BTC supply, followed by shrimp, crabs and octopuses (<50 BTC) with about 23%. Exchanges and miners control 13% and 10% of bitcoins, respectively.
Schulze-Kraft commented on the data and said that the largest non-exchange network members are likely institutions, funds, custodians, OTC traders and other wealthy people.
“On the other hand, the smaller network members holding at least 50 BTC control almost 23% of the supply. This shows that a significant amount of bitcoin is in the hands of retail investors, ”he added.
More importantly, Schulze-Kraft said, there has been a steady dispersal of BTC supply in recent years, with a trend towards an increase in the number of smallholders. According to the report, the number of bitcoins owned by the smallest network members has increased by 130% since 2017, and by the second largest addresses by 14%. At the same time, the balances of the major players – dolphins and sharks, whales and humpback whales – decreased by 3% and 7%, respectively. At the same time, the number of whales has increased significantly since 2020.
“This suggests that institutional investors, foundations, family offices and other wealthy players are entering the industry. Yes, this is a bullish signal, ”concluded Schulze-Kraft.
This bullish trend is supported by the fact that the number of addresses that hold at least 1 BTC recently hit a new all-time high, surpassing the September 2020 record. In addition, in January, the number of active Bitcoin addresses reached 22.3 million.
