Bitcoin (BTC) has always been a hot topic in the circle. The Blockchain Center recently released a set of data, giving us a broader view of BTC from the perspective of BTC distribution.
Bitcoin held by the exchange
The first category is BTC that can be quickly circulated and traded, that is, BTC held by the exchange. This part accounts for 12.62% of the total circulation, and the number is still declining. CryptoQuant data shows that starting from the beginning of 2020, the exchange’s BTC balance has begun to decline, and the downward trend is becoming more and more obvious.
Due to the rapid development of encryption technology, there are many factors leading to this trend. For example, it is difficult for us to judge the emergence of new holders. They may buy BTC from the secondary market and then withdraw it to a cold wallet; we cannot infer that people’s demand for BTC has changed from making money to storing value , Although it is also possible.
DeFi may be another fuse of this trend. Holders withdraw BTC from exchanges, participate in the DeFi ecosystem, and become liquidity providers. They may also use the rapid development of decentralized exchanges to create an atmosphere of distrust of centralized exchanges, and take advantage of the situation to initiate a cryptocurrency withdrawal campaign against centralized exchanges. The blockade of BitMEX by U.S. regulators has also reduced the public’s trust in centralized exchanges.
From a positive perspective, this behavior can greatly increase the circulation cost of BTC, which is objectively beneficial to the price of BTC. It can also be seen from the above figure that as the exchange’s BTC balance decreases, the BTC price will also rise.
Bitcoin giant holding
The second category is BTC held by giants accounting for more than 3%. In addition to reducing giants’ favor for BTC and causing BTC liquidity, it also means that BTC will have the opportunity to be more widely used in all aspects of people’s lives. Bitcoin has entered a larger field, far away from the initially distant geek circle.
The data shows that 11 listed companies including Grayscale Bitcoin Trust, Microstrategy and Square already hold BTC. In addition, some individuals also hold large amounts of Bitcoin, including the Winklevoss twins, Tim Draper, etc. More and more giants and celebrities hold BTC.
Application ecosystem
The third category is BTC participating in the emerging application ecosystem, accounting for about 0.62%. This allocated bitcoin mainly refers to the tokenized BTC (WBTC/SBTC/RENBTC) with Ethereum (ETH) as the carrier. In addition, it also includes a small amount of currencies stored in the Lightning Network and Bitcoin side chains.
Due to the excellent liquidity of Bitcoin, it has irreplaceable value in the DeFi industry. As of October 10, 2020, there are more than 130,000 BTC main assets locked in Ethereum, worth 1.4 billion US dollars. This tokenized BTC reminds people that they don’t have to wait for the price of Bitcoin itself to rise to make a profit as in the past. They can be used like other DeFi tokens and enjoy more passive income.
Users are also more willing to hold bitcoins instead of providing reasons for making a profit and exit the market, and may continue to have a positive impact on the price of BTC.
Zombie coins and Bitcoin scams
The number of zombie coins is approximately 1.7 million (including 1 million Satoshis), accounting for approximately 8.10%. The definition of zombie coins refers to coins that have not been moved since 2010. It is difficult for this part of BTC to have a chance to flow into the market.
For BTC scams, including PlusToken scam, Mt.Gox, Bitfinex Hacker, etc., under the increasingly sophisticated knowledge and anti-money laundering control of exchanges, the cost of entering the secondary market is getting higher and higher. Most exchanges will block scam addresses, and further Prevent it from entering the market.
Bitcoin left for mining
In the last category, there are currently about 3 million BTC available for mining, accounting for approximately 14.28%. There is the rest of the supply in circulation.
By observing the distribution of BTC, we can conclude that Bitcoin is becoming scarcer. There are more bitcoins held by giants, more BTCs held by the application ecosystem, and more BTCs that are forever silent, and only 14.28% of bitcoins can be mined. The remaining BTC is getting less and less, and more usage is constantly emerging. Bitcoin price trend is obvious.
