If the huge amount of BTC locked in the wallets of long-term investors is anything to by, bitcoin’s nascent adopters are in no hurry to cash out. Many of the coins accrued and stored in the cryptocurrency’s earliest days have yet to move.
Bitcoin Hodlers Are Creatures of Habit
Cryptocurrency attracts an eclectic mix of creatures. Bulls and bears notwithstanding, there appears to be a lot of squirrels, each in possession of acorns stashed in the cryptocurrency forest whose seeds are still taking root.
As much as 25% of all BTC is sitting in wallets that were created before the 2017 price peak and have yet to make any outgoing transactions. Diar estimates that a quarter of all BTC is taken up by long-term investments, while the lost and illiquid category (which includes unmined coins) constitutes 30% of the total pie.
Diar’s recent reckoning states that a majority of circulating bitcoins (55%) are sitting in wallets pegged above $1.3M at current prices. In fact, over 87% of bitcoins are tucked inside wallets that hold more than 10 BTC ($60K+). What’s remarkable is that these coins sit in only 0.7% of all bitcoin addresses. Similarly, wallets with over 100 coins ($640K+) that represent 62% of all outstanding bitcoins belong to under 0.1% of all addresses.
In It for the Long Haul
Aside from the tranche of coins believed to belong to Satoshi Nakamoto, the remainder would appear to be the property of astute investors who pitched their tents long ago. In addition, 3.8% of the total bitcoin supply resides in five wallets known to be managed by major exchanges. Blockchain analytics firm Chainalysis also indicated in a report in April that as much as one third of the current bitcoin supply is concentrated in the hands of 1,600 individuals.
Incidentally, during the nosedive that bitcoin has taken this year, the hashrate of the network has climbed. The growing hashrate can be taken as a sign of the strengthening security infrastructure, further bolstering bitcoin’s appeal, not least to long-term investors who can take comfort from the fact that the network is safer than ever.
Diar notes that 42% of bitcoins held in investment wallets (containing 200 BTC+) manifested no outgoing movement during the price peak in December 2017, and 27% of these wallets have added more coins to their stash since. There is evidently a clear path that long-term investors have chosen to walk. Come moon or gutter, peaks or troughs, these early adopters are in it for the long haul.
Do you think bitcoin’s early adopters will eventually cash out, or will they keep adding to their stash?
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