Bitcoin Supply Becoming Less Concentrated On Whales: Data
Data from Glassnode revealed that Bitcoin supply is gradually dispersing from whales and exchanges to smaller hands over time.
Bitcoin supply is slowly showing dispersion for smaller holders
According to a new report published by on-chain analytics firm Glassnode, investors holding less than 50 BTC have recently absorbed the most significant volume of coins.
Something BTC critics often defend against the cryptocurrency is supply distribution. They argue that supply is heavily concentrated around a few whales, providing evidence of large portfolios.
To check whether this fact holds, Glassnode studied the supply distribution of the market by dividing investors into different cohorts. These titleholder groups are defined by the analytics company as follows: shrimp (<1 BTC), caranguejo (1-10 BTC), polvo (10-50 BTC), peixe (50-100 BTC), golfinho (100-500 BTC) , tubarão (500-1.000 BTC), baleia (1.000-5.000 BTC) e jubarte (>5,000 BTC).
Supplies held by exchanges and miners are also considered for ranking. A relevant indicator here is the “annual absorption rates”, which measure the annual change in the supplies of the different cohorts as a percentage of the total amount of coins issued (i.e. the new supplies produced by miners).
First, here’s a graph that shows how the annual absorption rates of shrimp and crabs have changed over the life of the cryptocurrency:
Looks like the metrics have shown high values in recent days | Source: Glassnode
As displayed in the chart above, Bitcoin shrimp and crabs have recently seen high absorption rates of around 105% and 119% respectively.
This means that the supply maintained by shrimp grew 105% of what the miners produced last year, while crabs added an even more significant percentage, 119%.
Even though BTC miners released 100% of what they mined last year, these cohorts still absorbed an extra supply. Where did these additional coins come from? The uptake rates of the other cohorts may be the answer to this.
The absorption rates of the sharks and whales | Source: Glassnode
From the graph, it is evident that sharks have had a slightly positive annual absorption rate recently. Still, whales had a negative indicator value, implying that this cohort has been distributed over the past year.
The combined change in supplies for both cohorts is also negative, as the distribution of whales far outweighs what sharks accumulated during this period.
Data on the absorption rates of exchanges also show negative values, implying that these platforms have put many coins into circulation.
The highly negative absorption rates shown by exchanges | Source: Glassnode
Smaller Bitcoin entities are taking the coins distributed by these cohorts. Interestingly, while this shift in supply has been extreme recently, it’s a trend that has continued over the years.
As the chart below highlights, supply held by smaller entities (less than 50 BTC) has gradually gained dominance throughout the history of the cryptocurrency.
The rise of the shrimps and other small investors | Source: Glassnode
While the share of whales may have been quite significant at some point, today their holdings have shrunk to just 34.4% of the entire circulating supply, which, while still sizable, is far less than the 62.7% at the time of the first halving, the events that cut BTC mining rewards in half, in 2012.
The gradual change in supply also appears to be for smaller entities, which are small investors. This is a sign that cryptocurrency is becoming more dispersed as adoption increases.
BTC price
At the time of writing, Bitcoin is trading around $24,300, up 10% over the last week.
BTC observes a pullback | Source: BTCUSD on TradingView
Featured Image of Dmitry Demidko at Unsplash.com, Charts by TradingView.com, Glassnode.com