By now, we all know the sordid story of Mr. Bankman-Fried, the one-time crypto prodigy who is now under house arrest in the very cozy California home owned by his parents.
While debacle may be old news, unfortunately crypto investor, the shocking fall The victims continue to be pulled down. The latest is Genesis, the crypto lender that has filed for bankruptcy, reportedly owing $3.5 billion to its top 50 creditors.
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Here, I want to focus on how the events of the past few months have affected distribution since this latest crypto scam. Bitcoin, Because the beauty of blockchain is that we can track addresses across the network, seeing how the 19.27 million bitcoins currently in circulation are distributed.
Bitcoin addresses drop below $1K
The first result of the collapse was a decline in small addresses holding less than $1K. These addresses are often called “shrimp”, ie small fish.
38.7 million addresses holding between $1 and $1K of the crypto fell as FTX dropped to 38.1 million after FTX. Not the biggest move in the world, but considering that the price of bitcoin also declined by 20%, it is likely that wallets above $1K fell into this basket as bitcoin is worth less in USD terms.
However, this highlights that the short fry were selling after the FX collapse, with accumulation only now returning to January. However, again worth noting that addresses holding less than $1K of bitcoin comprise only 2.84% of the total supply.
Growth of holders between $1K and $10K
Interestingly, the pattern was quite similar with the number of wallets containing $1 million or more in bitcoin. For once, it seemed that whales and fishes belonged together.
Interestingly, I saw the opposite trend when looking at wallets with between $1K and $10K of bitcoin. There was a perceptible uptick just after the collapse of FTX, which slowed down in January as the market recovered.
Again, it’s a little hard to know what to make of this because the price of bitcoin has risen so quickly, which means that a lot of wallets already classified here will have moved up to the next category, but this is definitely different. Because every other sect shows the opposite effect. 4.6% of the bitcoin supply is contained in wallets containing between $1K and $10K of bitcoin.
Bitcoin’s Distribution Remains Uneven
You may have noticed that the numbers I gave above regarding the percentage of the bitcoin supply contained in smaller wallets are quite low. This is because the distribution of bitcoins is very heavy.
Less than 6.5% of the supply is contained in wallets that hold less than $10K. Meanwhile, more than half of the entire supply, 51.8%, is contained in wallets with more than $10 million. This figure swells to 70% of the total supply when looking at all wallets containing more than $1 million worth of bitcoin.
The data shows that while bitcoin is decentralized, the distribution of its coins is not. Whale wallets dominate, which is a result of bitcoin being so cheap in the early days before such a significant upward move.
Putting $500 or $1000 in bitcoin just seven or eight days ago will give you tremendous returns, and that’s why we see these big whale wallets exist.
