Less Than 1% of Bitcoin Addresses Control Nearly 87% of BTC's Supply, Analysis Finds

Francisco Memoria

China’s state-run financial publication National Business Daily (NBD) has recently conducted an analysis of all bitcoin addresses, and found that about 0.7% currently control 86.9% of the flagship cryptocurrency’s circulating supply.

The reported used data from BTC.com and concluded that these addresses owned roughly $62 billion worth of the cryptocurrency, and that out of the 22.65 million addresses with some BTC in it, 97.2% have less than 1 bitcoin. Only 0.7%, the report adds, had over 10 BTC in them.

Distribution of all of Bitocin's addresses

After taking a closer look, NBD’s reporter, according to 8BTC, found that these addresses controlled roughly $62 billion worth bitcoin, while the other 97.2% with less than 1 BTC controlled 4.6% of the cryptocurrency’s circulating supply, less than $4 billion.

The study also found that the addresses on with the most BTC belong to cryptocurrency exchanges like Binance and Bitfinex. It noted that various large addresses may belong to more than one person, and that it makes sense for exchanges to have the largest addresses as these hold funds for thousands of users.

The existence of other ‘bitcoin whales’, the reporter added, is worrisome for investors looking to enter the market as large buy and sell orders can have a significant impact on the market, but would represent a fraction of their holdings.

According to CryptoCompare data, it would take a 2,027 BTC sell order, worth $7.8 million, to send bitcoin’s price down 10% on Coinbase, the largest cryptocurrency exchange in the United States.

Last year, cryptocurrency enthusiasts noticed a mysterious whale moved over $100 million worth of BTC to cryptocurrency exchanges, and the price of bitcoin dropped over $400 in 90 minutes, presumably because of a large sell order.

A report published last year by blockchain analytics firm Chainalysis found that only 14% of all bitcoin addresses belong to private investors, and that only 37% of the addresses on the flagship cryptocurrency’s network are “economically relevant,” as the rest as used to facilitate payments.

Bullish Bitcoin Investors Are Ignoring Institutional Bears

Neil Dennis

Bitcoin investors remained positive this week, despite data showing that bearish bets on the futures market had increased during the previous week.

Positioning data on CME Bitcoin futures showed that institutional managers held 14% more short positions in the seven days to Friday, June 21, than in the week before, according to the Commodity Futures Trading Commission (CFTC).

Futures trade allows investors to back an asset's losses as well as gains: short positioning means backing an asset to fall in price over a defined period.  The increase in the CFTC short position data on CME Bitcoin futures, therefore, would indicate growing bearishness by the larger institutional players.

Playing it by the Charts

They may have been playing it by the charts. The previous two tops occured in mid-May when the price of Bitcoin reached a high of $8,352 before falling back nearly $1,000, and then at the very end of May reaching $9,066 before falling back to $7,807.

The chart shows that in the week to June 21, when shorts on CME Bitcoin futures grew, Bitcoin pushed up above $10,000, in a chart pattern that might have led many to believe another pullback was imminent.

This drop, predicted by many institutional investors, never came, however, and private investors continued to back the Bitcoin rally. Indeed, the CFTC report showed that smaller investors continued to hold more long positions - backing the continued rally: investors with fewer than 25 Bitcoin futures contracts showed four times as many long positions than shorts.

Short Covering

This may help explain how the rally of the last couple of weeks gained momentum, as those on the institutional side joined the buying to cover their short positions.

Tanya Abrosimova, analyst for FXStreet , said:

Many experts believe that at this stage Bitcoin is driven by FOMO (fear of missing out), while the market repeats the situation of late 2017.

It is also likely that Facebook's announcement about the lauch of its Libra cryptocurrency caught the institutional shorts on the wrong side of the market. Since the Libra announcement on Tuesday, June 18, Bitcoin has gained more than 30%.

Abrosimova added:

Looking technically, Bitcoin has been growing strongly for eight days in succession, which is the longest period of uninterrupted growth since December 2017. As BTC/USD is trying to take out a new barrier at $12,500. Once it is out of the way, the next bullish target of $13,000 will quickly come into view.