One of the benefits of a decentralised cryptocurrency is we can use open source and publicly availably data from the Blockchain to build insights and intelligence, helping us understand capital flows and upcoming trends.
I call this on-chain market intelligence. Anybody can form a value based on facts, figures, stories, news-flow, anecdotes from Uber drivers, what they read on Twitter etc.
But facts are clear when we reference on-chain intelligence.
Changes in ownership over time
With that in mind, I recently came across a great piece written by Glassnode which analysed who is purchasing Bitcoin and how wealth is distributed across various accounts (wallets) the blockchain. Great read and reference point.
The article addresses many misconceptions, namely that a handful of accounts with large amounts of Bitcoin own most of the wealth and manipulate pricing to their advantage.
It did a great exposé to show that coin distribution is growing and the most aggressive acquirers of new coins are those with balances greater than or equal to 1k Bitcoins (also known as Whales).
A couple of points standout to me:
1) Over the past 10 years, the number of small investors has grown rapidly. Shrimps have been steadily increasing their exposure to Bitcoin and this is a consistent trend over time.
2) From 2016 through to last year, Whales were decreasing their holdings, but they’re back and with a vengeance. This suggests that institutional money is starting to flow into Bitcoin at a rapid rate. The rate of large purchases ramped up late last year, early this year.
Here is another chart which shows Whale balances.
Serious money is flowing into Bitcoin, will it last?
Since the beginning of 2020 the supply held by large entities (whales + humpbacks) has increased 13.4%, and their number by more than 27% to over 2,160 whale entities.
This supports the current narrative that high net worth individuals and institutional investors have been entering the space. I’ll be watching closely to see if this trend continues in the coming months or if this is simply an anomaly.
I’ll also be watching closely to see what happens if the Bitcoin price pulls back. Are they in for the long haul, do these Whales acquire or will they run and abandon ship.
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