Only 3.5 million bitcoin or 19% of total circulating supply
is actively traded throughout the world, while the rest is being held
long-term by investors, according to a new report by crypto analytics
company Chainalysis.
Per the report, nearly 18.6 million bitcoin (BTC) has been mined as of June 2020. Of this, around 60% BTC
is held by entities – either people or businesses – that have never
sold more than 25% of the bitcoin they’ve ever received. Chainalysis
labeled this BTC supply as “held for long-term investment.”
Another
20% of the existing bitcoin supply has not moved from its current set
of addresses in five years or longer – what Chainalysis called “lost
bitcoin”. The remainder – 3.5 million of all mined BTC – is used for trading, primarily between exchanges.
“The
data shows that the majority of bitcoin is held by those who treat it
as digital gold: an asset to be held for the long term,” said
Chainalysis in the report published this week. “But this digital gold is
supported by an active trading market for those who prefer to buy and
sell frequently,” it added.
report observed that bitcoin being held for long-term investment will
become important as a source of liquidity because of more people who are
looking to trade the top cryptocurrency, which is becoming scarce
following the recent supply cut of May 11.
Chainalysis found that throughout 2020, a total of 340,000 people are actively trading BTC
every week. There two types of traders, retail and professional, it
said. Retail traders are those who deposit less than $10,000 worth of
bitcoin on exchanges at a time. However, they account for 96% of all
inflows to exchanges per week.
Professional
traders make up only 4% of active traders – or around 39,000 transfers
weekly. However, they control market liquidity, accounting for 85% of
all the US dollar value of bitcoin sent to exchanges, according to the
report.
“Because of this, professional traders are the most
significant contributors to large market movements, such as those seen
during bitcoin’s dramatic price decline in March as the Covid-19 crisis
intensified in North America,” said Chainalysis.
On average, about 1.8 million BTC, worth $14.4 billion, has been transferred via exchanges per week so far this year.
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