• Is this having an effect on Bitcoin’s intrinsic value, and should retail investors be concerned?

  • Bitcoin, as one of the best-performing assets in the world, attracts a lot of attention from investors. Its transparent model is ineffective because every transaction is recorded on a public ledger. As a result, determining the whale addresses, which hold a massive amount of digital assets, is much easier.

    While it is unlikely to pique interest in a winter market, a bullish period raises concerns about over-concentrated ownership, and these issues have not been adequately clarified over time. In this article, we will attempt to determine whether just addresses can have an impact on Bitcoin’s decentralized model and whether smaller investors should be concerned.

    Whether you like it or not, Bitcoin ownership has increased.

    According to Coinmetrics, one frightening on-chain metric suggests that the top 10% of bitcoin addresses currently hold 18.7 million out of a possible 18.9 million total Bitcoin. From there, the top 1% of addresses control 17.3 million.

    On the surface, that appears to be a daunting statistic because it reeks of concentration; however, the largest addresses are frequently holding coins for thousands, if not millions, of people.

    BTC accumulation, on the other hand, cannot be denied. As shown in a previous article, institutions and funds have amassed over 8.4 million BTC at the moment, with Grayscale leading the pack with 647k BTC. Aside from that, exchanges hold close to 1.4 million BTC, or about 7.7 percent of the total Bitcoin supply.

    In addition to the trusts, nearly 225k BTC is wrapped as the Ethereum token WBTC. Finally, other sidechains such as Liquid and lightning networks hold a minor portion of Bitcoin’s capacity.

    Should small-cap investors be concerned?

    Another factor to consider is that, of the 18.9 million BTC available, approximately 30% of the supply has been lost over time. In August 2021, the BTC supply lost was approximately 7.16 million, which is a massive amount, and yes, these lost coins are also included in the top 10% of addresses.

    Fundamentally, BTC adoption and miners spending their coins on fiat expenses would continue the circle of distribution, allowing the supply to become increasingly equal. The number of addresses with at least 0.01 BTC increased in 2021, and mass Bitcoin accumulation will be difficult over time.

    As a result, it is highly unlikely that the current concentration dynamic will affect BTC’s intrinsic value.

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