Original title: Demystifying Bitcoins Ownership Landscape
Original author: Will Ogden Moore, Grayscale Research
Original compilation: Luccy, BlockBeats
Editors Note: A common misconception is that a small number of individuals own large amounts of Bitcoin. However, this is not the case, and data from multiple sources including Glassnode, Arkham Intelligence, Bitinfocharts and Bitcoin Treasuries shows that the supply of Bitcoin is widely distributed among various individuals, groups and organizations around the world.
Grayscale analysis compares different Bitcoin ownership groups, especially those that exhibit strong price inelasticity, and illustrates their impact on the Bitcoin market. The article points out that supply levels for illiquid and long-term holders hit record highs, while short-term supply fell to its lowest levels. This trend could make Bitcoin’s ownership dynamics more sensitive, potentially exacerbating the impact of global macro events and crypto markets.
Bitcoin ownership is widely distributed among various groups. 74% of Bitcoin holders own less than 0.01 Bitcoin (approximately $350 as of November 6, 2023).
About 40% of Bitcoin ownership falls into identifiable categories, including trading platforms, miners, governments, public company balance sheets, and dormant supply.
Notably, some of these groups represent “sticky supply,” which could increase the impact of demand-related tailwinds, including the 2024 Bitcoin halving or potential spot Bitcoin ETF approval.
As we approach the end of 2023, two important events are attracting widespread attention: the 2024 Bitcoin (“BTC”) halving and the possible launch of a spot Bitcoin ETF in the United States. Both events have the potential to expand the scope and breadth of investors seeking exposure to Bitcoin. A common misconception is that a small number of individuals own large amounts of Bitcoin. However, this is not the case. Due to the transparency of the Bitcoin blockchain, any individual can monitor Bitcoin information in real time, including its ownership structure. Data from multiple sources including Glassnode, Arkham Intelligence, Bitinfocharts, and Bitcoin Treasuries shows that Bitcoin’s supply is widely distributed across the globe among a variety of individuals, groups, and organizations.
In this article, Grayscale Research attempts to clarify some frequently asked questions about Bitcoin ownership and delve into the impact of various ownership groups. We also discuss the “stickiness” of Bitcoin’s supply and why it’s particularly important at this moment, and how this might impact the asset in the future.
Sticky supply refers to supply that is relatively price inelastic or is unlikely to be sold in the short term.
Bitcoin owners are widely dispersed
The vast majority of Bitcoin holders are small investors, and as of November 6, 2023, approximately 74% of Bitcoin addresses held less than 0.01 BTC worth approximately $350 in Bitcoin, as shown in Figure 1 below . In contrast to other historically high-risk, high-return assets such as private equity and venture capital, which are only open to accredited investors, Bitcoin is available to a global retail audience (with internet access). As such, Bitcoin’s ownership structure reflects the decentralized, open-source nature of Bitcoin technology. In fact, only 2.3% of Bitcoin holders own 1 BTC or more (each Bitcoin is worth approximately $35,000 as of November 6, 2023).
Figure 1: Bitcoin address distribution
Note: USD amounts have been rounded for readability, 1 Bitcoin is worth $35,000.
With the exception of Bitcoin being largely dispersed among many small holders, most of Bitcoin’s largest holders represent “the many” rather than just a few. As of November 6, 2023, the top five wallet addresses by Bitcoin holdings are either crypto trading platforms or government entities, as shown in the chart below.
Figure 2: Top 5 overall Bitcoin wallet addresses ranked by balance
Note: Typically, exchanges hold multiple wallets/addresses, which is why Binance appears multiple times here. Source: Bitinfocharts, Grayscale Investments. Data and positions as of November 14, 2023 are in USD. The price of Bitcoin in this chart is $36,891.
It’s worth noting that trading platform addresses, such as Binance and Robinhood, represent millions of individuals. Robinhood, for example, has 11 million monthly users holding and trading Bitcoin on its platform, while Binance, one of the worlds largest crypto trading platforms, has nearly 90 million monthly active users. Additionally, the U.S. government addresses listed above represent ownership by institutions rather than individuals.
Bitcoin holders range from trading platforms to public companies to major governments. Although some members of these groups may overlap with other groups (e.g., inactive supply and miners or public companies and miners), approximately 40% of the total Bitcoin supply can be attributed to identifiable ownership groups such as trading platforms, Government entities, public and private companies (e.g., Tesla and Block Inc.), mining companies that maintain the Bitcoin network, ETFs and other publicly traded funds, Wrapped BTC, consumer trading platforms (e.g., Robinhood), and inactive addresses. The figure below illustrates each group.
Wrapped BTC refers to Bitcoin that is locked in a smart contract and held as a derivative on another blockchain, such as Ethereum
Figure 3: Bitcoin’s identifiable supply
Note: Grayscales holdings are reflected in the ETFs and Funds category. This category includes futures-based products and other funds that hold Bitcoin. Sources: Bitcoin Treasures, Arkham Intelligence, Glassnode, Bitinfocharts. Note: There may be some overlap between certain groups (e.g. supply last active in the past 10 years and miners). All data is as of November 13, 2023, is for illustrative purposes only and is subject to change.
It is important for investors to understand and analyze the largest holders of Bitcoin and the potential impact these holders have on Bitcoin supply dynamics.
Some of these specific ownership classes reflect underlying “sticky” supply dynamics, in other words, these holders hold long-term positions in specific assets. For example, 14% of Bitcoin supply has not moved in 10 years. We believe this portion of the supply can be attributed to original Bitcoins owned by Satoshi Nakamoto, lost Bitcoins or addresses, and holders for up to ten years. As shown in the chart below, ten-year inactive supply has been growing since 2019 and is currently at an all-time high.
For illustrative purposes only.
Other ownership groups that appear to indicate relatively “sticky” supply levels include miners and trading platforms, which account for 20% of the total supply (~9% and ~11%) respectively. As shown below, although Bitcoin prices have changed considerably over time, these two ownership groups have historically been relatively immune to price elasticity. This is likely because miners accumulate Bitcoins as rewards over time and typically only sell the Bitcoins used to cover operating costs. In the past, periods of net miner outflows, such as November 2022, have had relatively little impact on Bitcoin’s overall miner balance. This suggests that miners’ overall Bitcoin balances likely include a large number of long-term holders. Some degree of price inelasticity in the short term may also extend to other ownership groups, such as Wrapped BTC (1.25% of total supply).
So what is the significance of these ownership groups indicating price inelasticity?
In the short term, relative level price inelasticity among Bitcoin owners may increase the impact of demand-related tailwinds. This can be compared to low-float stocks in traditional financial markets, i.e. stocks where a smaller proportion of a companys shares are available for trading on the open market. For example, a sudden change in demand for a low-float stock, coupled with a reduction in actively traded supply in the market, could result in an outsized impact on price. This dynamic may be particularly relevant for Bitcoin given the various inactive or price-inelastic Bitcoin ownership groups.
in conclusion
Bitcoin ownership is dispersed and diverse. Additionally, Bitcoin owned by reputable institutions demonstrates the maturity of the Bitcoin market and its growing public acceptance and mainstream adoption.
Going forward, global political and regulatory developments are likely to have a significant impact on the assets continued adoption and demand. For example: The possible emergence of a spot Bitcoin ETF in the United States could further remove friction for individuals and institutions seeking to allocate Bitcoin, while Argentina’s recent presidential election could signal a shift in how developing economies view Bitcoin and other cryptoassets. As of November 2023, there are less than six months until the 2024 Bitcoin halving.
At the same time, amid these demand-related tailwinds, Bitcoin’s supply remains significantly constrained; illiquid and long-term holder supply has surged to unprecedented levels, while short-term supply has dropped to minimal levels. If these trends continue, the Grayscale Research team anticipates that the dynamics of Bitcoin ownership may increasingly be intensified by the impact of macro events, such as the evolution of global policy and regulation (e.g., the approval of a U.S. spot Bitcoin ETF), and the development of crypto markets , such as Bitcoin halving in 2024.
