Grayscale, the world’s largest digital asset manager, has released a new report that reveals some interesting insights into Bitcoin’s ownership and supply dynamics. The report, titled “Bitcoin Ownership and Supply Dynamics: Insights from Grayscale”, analyzes the data from various sources, such as blockchain analytics, surveys, and Grayscale’s own client base, to shed light on who owns Bitcoin, how they acquire it, and how they hold it.
The main findings of the report are:
Bitcoin has a broad and diverse ownership base, with different types of investors holding different amounts of Bitcoin for different reasons. The report identifies four main segments of Bitcoin owners: retail investors, institutional investors, whales, and miners.
Retail investors are the largest segment of Bitcoin owners, accounting for about 60% of the total supply. They typically hold small amounts of Bitcoin (less than 10 BTC) and are motivated by various factors, such as speculation, hedging, innovation, or social impact.
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Institutional investors are the fastest-growing segment of Bitcoin owners, accounting for about 10% of the total supply. They typically hold large amounts of Bitcoin (more than 1000 BTC) and are motivated by strategic reasons, such as portfolio diversification, inflation protection, or long-term value appreciation.
Whales are the most influential segment of Bitcoin owners, accounting for about 20% of the total supply. They typically hold very large amounts of Bitcoin (more than 10,000 BTC) and are motivated by financial reasons, such as market making, arbitrage, or trading.
Miners are the most active segment of Bitcoin owners, accounting for about 10% of the total supply. They typically hold moderate amounts of Bitcoin (between 10 and 1000 BTC) and are motivated by operational reasons, such as cost recovery, revenue generation, or network security.
Bitcoin has a sticky supply dynamic, with most of the owners holding their coins for long periods of time and resisting selling pressure. The report estimates that about 80% of the total supply is illiquid, meaning that it is either lost, locked, or held for long-term investment. Only about 20% of the total supply is liquid, meaning that it is available for trading or spending.
The report also identifies three main factors that influence the liquidity of Bitcoin: demand shocks, price cycles, and network events. Demand shocks are sudden increases or decreases in the demand for Bitcoin, such as institutional adoption or regulatory changes. Price cycles are periodic fluctuations in the price of Bitcoin, such as bull runs or bear markets. Network events are technical changes or upgrades in the Bitcoin protocol, such as halvings or forks.
The report finds that Bitcoin has a broad and diverse ownership base, with investors from different regions, age groups, income levels, and investment objectives. According to a survey conducted by Grayscale in June 2021, 38% of US adults said they own or are interested in owning Bitcoin, up from 36% in 2020 and 31% in 2019. The survey also shows that Bitcoin appeals to both younger and older generations, with 67% of millennials and 58% of Gen X saying they are interested in Bitcoin, compared to 49% of baby boomers and 44% of the silent generation.
The report also highlights the sticky nature of Bitcoin’s supply, meaning that most of the existing Bitcoins are held for long-term investment rather than for short-term trading or spending. The report estimates that 78% of the circulating Bitcoin supply is either lost or held for the long term, leaving only 22% for active trading. This implies that Bitcoin’s supply is becoming scarcer over time, as more investors choose to hold it for its store of value and hedge against inflation properties.
The report concludes that Bitcoin’s broad ownership and sticky supply dynamics are positive indicators for its long-term value proposition and adoption potential. The report states: “As Bitcoin continues to mature as an asset class, we expect its ownership base to expand and diversify further, reflecting its global accessibility and utility. We also expect its supply dynamics to remain favorable for long-term investors, as more Bitcoins are locked up in illiquid wallets or products that cater to the growing demand for digital gold.”
Bitcoin’s broad ownership and sticky supply dynamics indicate that it is a mature and resilient asset class that can withstand market volatility and external shocks. The report also suggests that these dynamics create favorable conditions for long-term value creation and growth for Bitcoin and its investors.
SEC Spot Bitcoin ETF potential approval window is between January 5th – 10th, 2024
The cryptocurrency community is eagerly awaiting the decision of the US Securities and Exchange Commission (SEC) on the first Bitcoin exchange-traded fund (ETF) in the country. The SEC has set a deadline of January 10th, 2024, to approve or reject the proposal by VanEck, a New York-based investment firm. However, some analysts believe that the SEC could make its move earlier, between January 5th and 10th, based on the Federal Register publication date and the statutory review period.
A Bitcoin ETF is a financial product that tracks the price of Bitcoin and allows investors to buy and sell shares of the fund without having to deal with the technical aspects of owning and storing the cryptocurrency. A Bitcoin ETF would provide more liquidity, transparency, and regulatory oversight to the market, and potentially attract more institutional and retail investors to the sector.
The SEC has been reluctant to approve a Bitcoin ETF in the past, citing concerns over market manipulation, fraud, custody, and investor protection. However, the agency has recently signaled a more open-minded approach, as it has approved several ETFs based on Bitcoin futures contracts, which are derivatives that bet on the future price of the asset. The SEC has also asked for public comments on various aspects of a Bitcoin ETF, such as valuation, liquidity, arbitrage, and potential conflicts of interest.
VanEck’s proposal is different from the futures-based ETFs, as it seeks to directly hold Bitcoin in a trust and track its spot price, which is the current market price. This would offer more accuracy and efficiency to investors, as well as lower fees and risks. VanEck has partnered with Cboe BZX Exchange, which would list and trade the shares of the ETF, and Bank of New York Mellon, which would act as the administrator and custodian of the fund.
If the SEC approves VanEck’s Bitcoin ETF, it would be a historic milestone for the cryptocurrency industry, as it would mark the first time that US investors can access Bitcoin through a mainstream and regulated investment vehicle. This could boost the demand and adoption of Bitcoin, as well as its price and market capitalization. It could also pave the way for more innovation and competition in the space, as other firms would likely follow suit and launch their own Bitcoin ETFs.
However, if the SEC rejects VanEck’s proposal, it would be a major setback for the industry, as it would indicate that the regulator is still not convinced that a Bitcoin ETF can meet its standards and protect investors. This could dampen the enthusiasm and confidence of investors, as well as limit their options and opportunities to invest in Bitcoin. It could also create more uncertainty and volatility in the market, as investors would have to rely on other platforms and vehicles to access Bitcoin.
The SEC’s decision on VanEck’s Bitcoin ETF is expected to have a significant impact on the future of Bitcoin and the cryptocurrency industry. Therefore, investors should pay close attention to the developments and announcements from the regulator in the coming weeks, as they could influence their investment strategies and outcomes.