There is a saying that ‘2% of accounts control 95% of Bitcoin’, but is Bitcoin so focused on a specific investor? On February 2, Glassnode, an on-chain data analysis organization, examined the actual distribution of BTC in detail and released the results. According to the results, the distribution of BTC is scattering over time and the degree of centralization is lower than expected, Glassnode analyzed. At the same time, the recent increase in the amount of BTC held by whales is seen as a sign of a full-fledged entry for institutional investors.
Bloomberg pointed out in a recent report that ‘2% of accounts control 95% of BTC’. Data from Bitinfocharts shows the degree of similar distribution of BTC across all addresses. Some other data present similar data indicating that BTC is highly concentrated on someone on the Bitcoin network. However, the problem with these data is that it only analyzes the distribution of BTC over network addresses. This leads to wrong statistics and misinterpretations of the distribution of BTC.
There are two disadvantages to this method of investigation. First, not all Bitcoin addresses are treated the same. For example, it is necessary to distinguish between addresses of exchanges with millions of users’ funds and addresses managed by individuals. Second, Bitcoin addresses are not’accounts’. This is because one user may have multiple addresses, and one address may hold the funds of several users at once.
Glassnode analyzed the distribution of bitcoins among holders (entities) of various sizes, while also taking into account the addresses of exchanges and miners. Glassnode understands more clearly the actual distribution of BTC among coin holders and shows that the degree of centralization of Bitcoin is much lower than what has been known. In fact, the distribution of BTC has become increasingly distributed over the years. Also, the significant increase in the amount of BTC held by whales over the past year is evidence of a massive influx of institutional investors.
# Distribution of Bitcoin holdings
Glassnode classified bitcoin holders as marine creatures according to their bitcoin holdings. Also, known exchanges and miners in these categories were excluded and separated. As a result, the distribution of Bitcoin holdings as of January 2021 is as follows.
Shrimp (<1 BTC) holding rate 4.9% (retention volume 0.9M)
Crab (1~10 BTC) 9.0%(1.68M)
Octopus (10-50 BTC) 8.9% (1.66M)
Fish (50-100 BTC) 4.7% (0.87M)
Dolphin (100~500 BTC) 11.8% (2.20M)
Shark (500~1000 BTC) 6.6% (1.23M)
Whale (1000~5000 BTC) 18.4% (3.43M)
Humpback Whale (> 5000 BTC) 13.3% (2.47M)
Exchange 12.7% (2/36M)
Miners 9.7% (1.81M)
In terms of distribution, whales and humpback whales are the largest non-exchange holders and, when combined, have 31.7% bitcoin. These are likely institutions, funds, trustees, OTCs and other individuals with high net worth. On the other hand, the number of holders with less than 50 BTC (shrimp, crab, octopus) is 22.8%. This shows that even ordinary investors have quite a bit of bitcoin.
The following is the change in the distribution of bitcoin quantity for each holder over time. Looking at the amount of bitcoin holdings over time, the relative proportion of small bitcoin holders such as shrimp, crab, and octopus has been shown to continue to increase. This is interpreted as meaning that the interest in bitcoin of ordinary investors is continuously increasing.
Over the past year, whales’ bitcoin holdings have also been on the rise. Looking at the relative change in the amount of BTC held by each entity, it can also be seen that the trend of more BTC diversification over the past few years has become clear. Since 2017, the amount of BTC for small holders (shrimp + crab) has increased by 130%. The next small holder (octopus + fish) also increased its holdings by 14% during this period. On the other hand, BTC holdings of large holders (Dolphin + Shark, Whale + Humpback Whale) recorded -3% and -7%, respectively.
# Number of holders
Looking at the number of each holder defined above, as expected, the minority holders make up the majority.
96.9% (22M) shrimp
2.455% of crabs (560K)
Octopus 0.313% (72K)
0.047% of fish (11K)
0.044% of dolphins (10K)
Shark 0.007% (1,500)
0.008% (2,000) whales
Humpback Whale 0.001%(220)
Exchange 0.001%(15)
Miners 0.221% (51K)
Based on the above figures, it can be seen that about 2% of BTC holders hold 71.5% of Bitcoin. Therefore, there is a big difference from the popular saying that ‘2% controls 95% of Bitcoin’.
# Things to think about
This figure is an estimate of the upper limit of Bitcoin’s actual distribution. The actual distribution is expected to be more uniform than the results of this survey. Meanwhile, there are some additional things to consider.
Trustee. This analysis does not take into account Grayscale and other agencies’ consignment services. However, the BTC they hold is most likely in the whale and humpback categories. Considering that the institution’s bitcoins (Grayscale owns about 650,000 BTC as of February 3) are entrusted on behalf of multiple holders, some investors entrusted to the institution are at the level of dolphins and sharks, not whales. May be.
Lost Bitcoin. Many bitcoins were initially lost. At the time, methods of how to hold Bitcoin were not widely available. Also, due to the low price of early bitcoins, large amounts of bitcoins were stored in a single address or wallet. Many of these have been lost or are not on the market. So, considering lost bitcoins, bitcoins can be scattered in more places.
Encapsulated Bitcoin. Currently, about 115,000 BTC is encapsulated in the WBTC ERC20 token. The custodian is storing this BTC in an address with a balance of at least 1,000 BTC. Similarly, given that Bitcoin is owned by many investors, it can be assumed that the distribution of BTC is more distributed among various entities.
The number of small network holders. The total number of Bitcoin holders can be much smaller. Many addresses may still not have been classified as single holders. This is especially the case if Bitcoin is not moving on the chain. For example, the number of bitcoins in the current storage address (i.e., an address where bitcoins have never been bought and sold) is 2.6 million BTC. For small investors like shrimp, the impact is even more evident, meaning that within this range there is a possibility that the actual number of Bitcoin holders will decrease significantly.
Quantity held by the exchange. Exchange users can have a great influence on the above distribution. The number of exchange users is estimated to be about 130 million. It is reasonable to assume that the vast majority of them are ordinary investors. Including an exchange as a single Bitcoin holder has two effects. First, since the exchange has been classified as a single holder, the number of small holders may seem relatively larger. On the other hand, since the number of bitcoins (2.3 million BTC) held by the exchange is entrusted by multiple investors, dividing it into small investors will increase the possibility of more distributed distribution of bitcoins. Of course, the precise interaction of these two factors requires further evaluation.
Whale’s rise proved entry by institutional investors. As mentioned earlier, the number of whales and the number of bitcoins held have increased significantly over the past few months. This can be seen in the recent increase in bitcoin holdings and the increase in the number of whales. Since the beginning of 2020, the number of large holders (whales + humpback whales) has increased by 13.4%, the number of large investors has increased by more than 27%, and the number of whales has exceeded 2,160. Of particular note is the rise of whales that began in 2021. This supports the claim that individuals and institutional investors with high net worth have entered the field. It is believed that this trend will benefit bitcoin prices in the coming months.
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