Sophia’s Thoughts On Bitcoin’s Distribution
This week, we analyzed Bitcoin's distribution, revealing who holds the most of this digital asset. How does this impact the market? And who is stacking the most?
These are Sophia's Thoughts:
Bitcoin's supply is distributed across a range of stakeholders, with individual investors holding the majority, and significant portions controlled by entities such as miners, businesses, governments, and the mysterious creator, Satoshi Nakamoto.
Institutional interest in Bitcoin has surged, with over 1 million Bitcoin now held by ETFs and major financial institutions, highlighting Bitcoin's growing acceptance as a mainstream asset.
While ETFs and financial institutions make headlines, other players like miners, pension funds, and governments, are steadily stacking Bitcoin.
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🚀 Last week’s market performance
The market chopped sideways this week, ending right where it started, down 0.1%. Bitcoin (BTC) closely mirrored the market's movements, rising 0.3%. The worst performing coin was Celestia (TIA), which dropped 14.3% over the week. The best performing coin was AAVE (AAVE) which rose an impressive 23.3% as whales began stacking the coin and interest in the DeFi space continues to grow.
🧐 What is your crypto mood today?
In each Sophia's Thoughts newsletter, we ask about your crypto mood. Your response to this question helps Sophia get a better sense of the pulse of crypto markets. And this ultimately translates into better insights for you when combined with Sophia's AI models. Your data empowers Sophia to provide you with even better intelligence going forward!
🧮 How is Bitcoin’s supply distributed?
Bitcoin’s fixed supply of 21 million coins has made its ownership distribution a crucial aspect of its market dynamics. As of February 2024, the distribution of Bitcoin ownership is spread across various entities, with individual investors holding the largest share at 57%, amounting to approximately 11.97 million BTC. This is followed by 17.6% of Bitcoin that is considered lost, estimated at around 3.7 million BTC, which tightens the actual circulating supply even further.
Significant portions of Bitcoin are also held by other key players in the market. Miners control about 714,000 BTC (3.4%), while businesses and institutional investors hold 758,000 BTC (3.6%) and 818,000 BTC (3.9%), respectively. Governments also have a stake in the market, with around 565,000 BTC (2.7%) acquired through legal seizures and strategic purchases. Finally, the mysterious creator of Bitcoin, Satoshi Nakamoto, is estimated to own 1.1 million BTC, accounting for 5.2% of the total supply.
The distribution of Bitcoin ownership reflects a diverse range of stakeholders, each influencing the market in different ways. Large individual holders, often referred to as "Bitcoin whales," and the significant amount of lost coins, play large roles in shaping market liquidity and the supply-demand dynamics. Meanwhile, the presence of institutional and governmental holdings introduces layers of market stability and regulatory influence. With the advent of the Spot ETFs, miners capitulating, and major institutions allocating crypto to their balance sheet, the distribution of Bitcoin’s supply is evolving rapidly.
🏦 Which financial institutions are interested?
In recent years, institutional interest in Bitcoin has surged. As of August 2024, over 1 million Bitcoin (approximately 5% of the total supply) is held by ETFs, reflecting a significant concentration of the digital currency in institutional hands. Blackrock’s iShares Bitcoin Trust leads with over 350,000 BTC under management, followed by Grayscale's Bitcoin Trust with 229,000 BTC and Fidelity's Wise Origin Bitcoin Fund holding around 178,000 BTC. These funds have played a role in facilitating institutional access to Bitcoin, providing a bridge between traditional financial markets and the burgeoning crypto space.
The landscape of ETF holdings is continuously evolving, with new players like 21Shares and Bitwise rapidly accumulating Bitcoin. Adding to this momentum, major financial institutions such as Goldman Sachs and Morgan Stanley have significantly increased their Bitcoin exposure. Goldman Sachs alone invested USD 600 million into BTC ETFs last quarter and Morgan Stanley disclosed over USD 270 million of GBTC spot ETF holdings. Millennium Management is the largest BTC ETF holder with USD 1.9 billion across different ETFs. Though these allocations are a relatively small percentage of these institutions' total assets under management, they represent the mainstream acceptance and recognition by traditional finance institutions of Bitcoin as an asset.
➡️ Beyond institutions
While institutional investors and ETFs have grabbed headlines for their significant Bitcoin holdings, there are a myriad of other entities adding Bitcoin to their balance sheets. This includes Bitcoin miners, retail investors, pension funds, and governments.
Bitcoin miners, who are responsible for securing the network and validating transactions, hold a significant amount of Bitcoin as part of their operational strategy. Many miners have moved away from just being producers of new Bitcoin and are now also becoming strategic holders, with some using debt to finance further accumulation. Marathon Digital Holdings, a leading miner, now boasts over 25,000 BTC in their reserves. They recently used proceeds from issuing convertible notes in August to fund a USD 249 million purchase of 4,144 BTC. Other notable holdings include Riot at 9,700 BTC, Hut at 9,100 BTC and CleanSpark at 7,090 BTC.
Pension funds and governments are also becoming increasingly involved in the Bitcoin market. For instance, the State of Wisconsin Investment Board has been actively increasing its Bitcoin holdings, and have now allocated roughly USD 164 million to IBIT and GBTC. Governments, too, have amassed significant Bitcoin reserves, often through legal seizures and strategic acquisitions. The United States and China are among the largest governmental holders, with the U.S. government holding over 207,000 BTC, primarily from seizures. China holds 194,000 BTC and the U.K is in third place with 61,000 BTC.
Countries like El Salvador have made Bitcoin a central part of their national strategy, holding reserves as part of their financial planning. El Salvador has taken a unique approach to Bitcoin relative to other countries. They began mining Bitcoin using geothermal energy in 2021 and to date, this project has yielded 474 bitcoins or USD 29 million. Moreover, their crypto affinity moves beyond stacking and has entered their educational system. The Salvadoran government has partnered with The Little HODLer and Mi Primer Bitcoin Education Non-Profit to educate their youth on financial literacy. They also have been purchasing Bitcoin consistently, with the National Bitcoin Office of El Salvador stating “Buying one bitcoin per day ensures an ever better future for El Salvador.”
While institutional investors and ETFs may dominate the news, a diverse range of entities, from miners to governments, are actively stacking Bitcoin. As the crypto asset class continues to develop, we will keep an eye on how Bitcoin changes hands over the coming months!
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