According to Chainalysis, the vast majority of Bitcoin (BTC) is held as a long-term investment, with 60% held by licensed custodians.
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Bitcoin supply breakdown
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The company concluded that the breakdown in Bitcoin’s supply makes it similar to gold, supporting the asset’s status as digital gold. They clarify, however, that it is the 3.5 million BTCs that are actively traded that support the price:
„But this digital gold is supported by an active trading market for those who prefer to buy and sell frequently. The 3.5 million Bitcoins used for trading supply the market, and, in interaction with the level of demand, determine the price.
Chainalysis defines long-term investors as those who have never sold more than 25% of their assets, noting that these users have often kept their assets for many years.
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340,000 weekly traders
Analyzing more deeply the commercial segment of Bitcoin’s offering, Chainalysis finds that although retail traders are responsible for 96% of the transactions, professionals move most of the volume:
„Retail traders, who we classify as those who deposit less than $10,000 of Bitcoin on the exchanges at any one time, seem to be the vast majority, as they account for 96% of all transfers sent to the 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 sent to the exchanges.
Retail traders versus professional traders
The company also concluded that the maximum number of weekly traders in 2020 was 340,000.
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60% is maintained with authorized custodians
Approximately 60% of all Bitcoin supply is in the hands of authorized custodians or Virtual Asset Service Providers, or VASPs. This statistic includes many exchanges. Coinbase alone contains about 1 million Bitcoins.
Where Bitcoin is maintained by the type of custodian
The company assumes that 3.7 million Bitcoin Lifestyle have been lost, including the approximately 1.1 million coins that were probably mined by Satoshi Nakamoto.
The role of the custodians has increased over time, which can fuel the fire for those who believe there is too much centralization within crypto space.