Data from Glassnode has revealed that the supply of Bitcoin is gradually spreading from whales and exchanges to smaller hands over time.
Bitcoin Supply Slowly Shows Spread To Small Holders
According to a new report published by on-chain analytics company Glassnode, investors holding less than 50 BTC have recently absorbed the most significant volume of the coin.
Something that critics of BTC often hold against cryptocurrency is the supply distribution. He argued that the supply was abundant in some whales, providing the presence of large purses as evidence.
To check if this is true, Glassnode studied the distribution of market supply by breaking investors into different groups. The group of holders is defined by the analytics firm as follows: shrimp (<1 BTC), kepiting (1-10 BTC), gurita (10-50 BTC), iwak (50-100 BTC), dolphin (100-500 BTC) , hiu (500-1,000 BTC), paus (1,000-5,000 BTC), lan humpback (> 5,000 BTC).
Inventory held by exchanges and miners is also considered classified. The relevant indicator here is the “annual absorption rate,” which measures the annual change in the supply of different cohorts as a percentage of the total number of coins issued (that is, the production of fresh miners).
First, below is a graph showing how the annual consumption rate of shrimp and crab has changed over the lifetime of the digital currency:
Looks like the metrics have shown high values in recent days | Source: Glassnode
As shown in the chart above, Bitcoin shrimp and crab recently observed an all-time high absorption rate of approximately 105% and 119% respectively.
This means that the supply held by shrimp has grown by 105% of what miners have produced over the past year, while crabs have increased by a more significant percentage of 119%.
Even though BTC miners released 100% of what they mined last year, the group is still absorbing additional supply. Where are these additional coins coming from? Absorption rates from other cohorts may also inform the answer.
The absorption rates of the sharks and whales | Source: Glassnode
From the graph, it is clear that sharks have a slightly positive annual uptake rate. Still, the whales have seen negative indicator values, which shows that this group has spread over the past year.
The combined change in supply of these two cohorts was also negative because the distribution of whales was greater than anything sharks collected during this period.
The data for the absorption rate of the exchange also shows a negative value, which means that the platform has released many coins into circulation.
The highly negative absorption rates shown by exchanges | Source: Glassnode
Smaller Bitcoin entities have taken the coins distributed by these groups. Interestingly, while this change in supply has been extreme, it has been a consistent trend over the years.
As the chart below highlights, supply held by small entities (less than 50 BTC) has gradually gained dominance throughout cryptocurrency history.
The rise of the shrimps and other small investors | Source: Glassnode
Although the share of whales may have been quite significant at some point, today, their ownership has decreased to only 34.4% of the entire circulating supply, which, although still quite large, is lower than the 62.7% at that time. The first halving, an event that cut BTC mining rewards in half, was back in 2012.
A gradual supply shift is also seen towards the smallest entity, the retail investor. This is a sign that cryptocurrency is becoming more widespread as adoption increases.
BTC price
At the time of writing, Bitcoin is trading around $24,300, up 10% over the past week.
BTC observes a pullback | Source: BTCUSD on TradingView
Featured images from Dmitry Demidko on Unsplash.com, charts from TradingView.com, Glassnode.com