A study considers that around 20% of the total bitcoins mined are lost. A total of 3.5 million BTC are used mainly for trading on exchanges.
After analyzing the current use of mined bitcoins, blockchain analytics company Chainalysis released a report, finding that people are using most of them as long-term investments.
According to the analysis, miners had extracted around 18.8 million BTC until the beginning of June. Around 60% of those cryptocoins are in the hands of people or companies that have never sold more than 25% of their bitcoins. The behavior of the users that belong to that 60% seems to indicate that they manage their bitcoins as a long-term investment.
The users that are part of that 60% seem to see Bitcoin as “digital gold”. However, the strength of such digital gold also relies on around 3.5 million BTC mined, reportedly used for speculative trading on exchanges.
This claim bases on the fact that the bitcoins used for trading are those that supply the market and give it liquidity. The bitcoins withdrawn from circulation to become long-term investments, together with those offered for speculation on the markets, determine the existing supply on exchanges and have a direct impact on the variations in the price of the cryptocurrency.
Importance of Commercial Investments with BTC
The report notes that, given that each halving makes Bitcoin scarcer, the long-term investment group could move to the trading group in the future if the demand for Bitcoin boosts the price. For that reason, they consider that the trading group will be a key element for Bitcoin in the future. However, they say that it could only happen if the price of the cryptocurrency increases enough for long-term investors to be willing to sell.
The report goes further and determines the approximate number of people that are trading with the 3.5 million BTC. They state that tens of millions of people own Bitcoin, but around 340,000 users are active Bitcoin traders every week. Besides, the data on the chain indicates that cryptocurrency exchanges have received more than 5 million visits per week so far in 2020.
Chainalysis says that it cannot identify all individual Bitcoin traders. However, they divided the total of transactions made to exchanges into retail and professional traders, distinguishing the former from the latter for trading less than USD 10,000 per week. In this sense, they explained the influence that professional traders have in the Bitcoin market.
Even though so-called professional traders make 4% of the weekly transfers in exchanges, they handle 85% of the volume sent to the exchange platforms in US dollars. This gives them a strong influence on the movements of the market and the ability to move it to their advantage.
The study also indicates that around 20% of the addresses that own Bitcoin have not moved their wallet address cryptocurrencies for over 5 years. Chainalysis considers that the owners of these cryptocoins had lost them, due to such a long period. Not having any type of access to the private keys of the wallet is enough for losing cryptocurrencies.
By Willmen Blanco