In summary:
- 60% of the Bitcoin in existence is held as a long-term investment.
- 20% of the Bitcoin ever mined has not moved in five years or more.
- Approximately 19% of the Bitcoin mined, moves frequently and is used for trading.
The team at Chainalysis has released a comprehensive report that highlights how investors and traders view and use Bitcoin. In the report, the team highlights the fact that roughly 60% of the Bitcoin ever mined is held by individuals or institutions who view it as a long term investment.
Majority of BTC Investors View Bitcoin as Digital Gold
Additionally, another 20% of the BTC in existence has not moved in five years or more. This means that approximately 80% of the Bitcoin in existence lays dormant to some capacity with some of it considered lost. It is with this fact that the report goes on to conclude that majority of Bitcoin investors view BTC as digital gold and worth holding for the long term.
The data shows that the majority of Bitcoin is held by those who treat it as digital gold: an asset to be held for the long term. But this digital gold is supported by an active trading market for those who prefer to buy and sell frequently.
Only 3.5 Million BTC is actively Used in Trading
Furthermore, of the approximately 18.6 Million BTC that has been mined, only 3.5 Million Bitcoin supplies the crypto trading markets. The screenshot below, also from Chainalysis, further provides a better visual distribution of the total supply of 21 Million BTC.
Professional Traders Control the Liquidity of the Bitcoin Market
Interestingly, retail traders account for 96% of all the Bitcoin transfers sent to exchanges on a weekly basis. Retail traders are categorized as individuals who deposit less than $10,000 USD worth of Bitcoin on crypto exchanges.
However, much of the Bitcoin liquidity is controlled by professional traders who account for 85% of all the USD value of Bitcoin sent to exchanges. Although their numbers are considerably lower when compared to retail traders, Professional traders are the major contributors to large market movements of Bitcoin. To demonstrate this fact, the report goes on to give the example of the Coronavirus crash of mid-March that saw Bitcoin become very highly correlated with the traditional markets.