New Chainalysis Crypto Report Shows Bitcoin Wallets See High Levels by Individual Users, Majority Holding
Bitcoin Wallets See High Levels by Individual Users, Says Chainalysis
Chainalysis released an annoucement on Monday that revealed 32% of Bitcoin’s supply, or about 4.8 million Bitcoins, are presently located within personal wallets. This is much different from the former supply held, which was primarily by companies and long-term investors, based on information available at the end of 2017. Back then, only 26% was held by individuals.
The current numbers, which were analyzed at the end of August, show that there are the second-highest number of individual accounts on record, though it is only a little less than what was found in July. According to economist Philip Gradwell of Chainalysis,
“There are more people who are holding crypto personally.” Therefore, “there's a much larger supply that's liquid. A lot of the people who bought [this year] are buying smaller amounts,” Gradwell noted. He added, “They are ready – if things were to change, [if] the opportunity to spend it were to arise – to actually spend it. We've kind of overcome the first hurdle of adoption, getting bitcoin into people's hands.”
When discussing the potential that Bitcoin has, Gradwell said that the various technical solutions could help with the processing of payments at a more rapid speed, which is the role of the Lightning Network. As the platform improves their protocols, additionally users could finally get the motivation needed to continue transacting with Bitcoin, rather than cashing out their cryptocurrency when the bullish state of the market returns.
Right now, Bitcoin is considered inactive as an investment, regardless of who uses it to invest. Right now, there are a total of 6.3 billion Bitcoin that is held by individuals and companies but have not even had activity logged in well over a year. Since one person has the option to hold their funds in multiple wallets, this statistic may not be as accurate as the industry believes as far as individual participation. The appreciation of tokens has proven to be an incentive for users to hold onto their funds as an investment, rather than spending it for now.
The Bitcoin market is still maturing right now, though Chainalysis economist Kimberly Grauer believes that the value of personal wallets has since stabilized lately. In fact, there have not even been many news articles that would otherwise add to the drama lately. In a statement to CoinDesk, Grauer said,
“You don't see wild fluctuations in the wealth between [investment accounts and active transactional accounts]. This is a sign of a maturing market with less volatility.”
When Chainalysis examined the data from August to December, the Bitcoin held by service providers had only increased by 93,299 Bitcoin. Considering the fact that there are over 1 million Bitcoin found in personal wallets alone, the data suggests that the idea of self-custody for tokens is becoming more appealing.
Right now, it would be difficult to figure out exactly how much of the commerce in this sector is clearly peer-to-peer. However, the data indicates that there has not been much of a change in activity for payment processors or even the darknet market. Gradwell described the wealth distribution as being fairly diverse, considering the participation of long-term investors. In fact, he believes that only 150,000 (of the 28.5 million wallets) even have more than 10 Bitcoin in them.
Summarizing, Gradwell said,
“Half of available bitcoin is still held by investors, but it has gotten somewhat less concentrated.”