The Dominance of the Elite
Recent data from the blockchain platform Glassnode reveals that a staggering 99% of Bitcoin’s circulating supply is held by the top 1% of Bitcoin addresses. This figure has reached a three-month high, with the last similar concentration observed at the end of June 2023. Interestingly, a significant portion of these addresses belongs to exchanges that store cryptocurrencies for their users.
A Deeper Dive into the Numbers
The top 1% of Bitcoin addresses currently possess approximately 19.5 million coins, which equates to 98.913% of the cryptocurrency’s existing supply. This concentration has been on the rise since June, with a brief pause due to Bitcoin’s unsuccessful attempt to surpass the $30,000 mark. However, with the cryptocurrency’s mini-bull run in July, which saw it exceed this threshold, there was a resurgence in accumulation by these dominant addresses. For context, in May, these addresses already owned 99% of the roughly 19.5 million coins in circulation.
A Personal Perspective on the Concentration
From my point of view, such a high concentration of wealth, especially in the decentralized world of cryptocurrencies, raises concerns about the potential for market manipulation. On the one hand, it’s reassuring to see institutional trust in Bitcoin, as many of these addresses belong to exchanges. On the other hand, the centralization of assets contradicts the very essence of decentralized finance. The pros include increased institutional trust and potential stability brought by “whale” investors. However, the cons involve potential market manipulation and a deviation from the decentralized ethos of cryptocurrencies.
Furthermore, it’s noteworthy that the number of Bitcoin addresses holding 1,000 BTC or more has declined to its 2019 levels. As of September 27, only 1,997 wallets held over $26.4 million worth of Bitcoin. This downtrend has been consistent, especially with events like the Terra crash and the FTX meltdown. In 2021, when the crypto market was at its peak, there were about 2,500 such Bitcoin addresses.
In conclusion, while the concentration of Bitcoin in a few addresses might indicate institutional trust, it’s essential to approach this data with caution and consider the broader implications for the market.
