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Main Point
BTC Current Price: $32,350 (7/22/2021)
BTC has grown immensely in the past few years. At the start of the 2020 pandemic BTC was at $3,800 per coin. At the end of 2020 BTC was at an all-time-high of $55K. 2021 started off with a sharp correction to $27.5K before making another massive upswing. Here is a short summary of the timeline:
2020 Low: $3,800
2020 High: $55,000
2021 Low: $27,500
2021 High: $64,800
The crypto landscape is at an unprecedented level. A record number of institutions have entered the crypto/Bitcoin space in the past few years. In this article, we'll explain why the space is still in its early stages and why we're headed for a bigger run than we've ever seen.
We'll discuss the importance of holders vs traders of Bitcoin. Bitcoin holders make up the most important part of the Bitcoin ecosystem because they provide a stable demand for Bitcoin while the rest of the world slowly adopts it.
Terms to Know
Treasuries: The funds of a government, institution, or corporation.
Market Index: A hypothetical portfolio that tracks the performance of an asset, or a basket of assets. Some indices can be traded. (NAS100, GER30, US30, SPX500).
ETF: An investment vehicle that tracks an asset or sector and can be traded on a public market.
Balance Sheet: A financial statement for an institution that highlights their assets and liabilities (what they own and what they owe).
CBDC (Central Bank Digital Currency): A government sponsored crypto-currency project.
The Bitcoin Landscape
The Bitcoin investment landscape is made up of 6 main players. These players have committed their personal money as well as that of their investors. Large investment decisions like these take a lot of research as well as a commitment to hold the investment for the long term.
6 Main players in the crypto space:
1) Countries (260,00 BTC)
2) Corporations (372,250)
3) Private Holders (unknown)
4) Exchanges
5) ETF's/ Funds (872,880 BTC)
6) Mining Companies
1) Countries
- Total value held by countries: 259,800 + BTC (aprox.). There are other governments that own BTC but have not reported it on their balance sheet. For example, the FBI confiscated about 70,000 BTC from criminals but it is not reported on the treasury balance sheet. Countries that have reported purchases of BTC:
Bolivia: 213,519 BItcoins
Ukraine: 46,351 Bitcoins
- Number of countries that have existing Bitcoin laws: 100 + countries
- Number of countries where BTC is Legal: 77+
- Number of countries who have outlawed BTC: 10+ (estimated).
Top 5 countries with anti-Bitcoin Laws:
1) Algeria 4) Vietnam
2) Bolivia 5) Morocco
3) Pakistan
There are countries that have not made Bitcoin Illegal but have banned institutions from facilitating transactions. (i.e Iran, Bangladesh, Thailand...).
- Some countries don't have the stability nor the resources to connect into the larger global money market. Getting into Bitcoin early is an opportunity that a lot of these developing countries are taking to save themselves from bankruptcy. As more countries get educated on the store of value benefit of Bitcoin we will see an exponential inflow of treasury holdings into BTC.
2) Corporate Holders of BTC (Public & Private)
- Total number of companies that have Bitcoin on their balance sheet: 45+ (estimate).
- Total value of corporate held Bitcoin: 372,250 BTC (current market value $11.9 Billion).
- Bitcoins owned by publicly traded companies: 214,700 Bitcoins.
- Private: 157,550 Bitcoins. (estimated). Since private companies don't have to disclose information like publicly traded companies do it would be impossible to know if some private companies owned BTC.
Top 5 companies who have disclosed their Bitcoin Holdings:
1) Block.One (EOS.io). (private): 164,000 BTC
2) Microstrategy (public): 92,079 BTC
3) Tesla (public): 42,182.72 BTC
4) Stone Ridge Holdings (private): 40,000 BTC
5) Voyager Digital (public): 15,901 BTC
3) Private Holders of Bitcoin
Bitcoin is anonymous so it's impossible to know who owns which address. Since we can't do a survey of private holders here are some interesting statistics on Bitcoin wallets/address:
- % of addresses that own less than 1 BTC: 98.8% [37,411,381 wallet addresses].
- % of addresses that own 1-10,000 BTC: 2% [799,633 addresses].
- % of addresses that own 10,000-100,000 BTC: .0001% [84 addresses]
- # of addresses that own 100,000+ BTC: 3 addresses.
Fun Facts
1) Total # of addresses: 38,211,101 addresses = 18,761,101 BTC
2) 3 addresses own 3.2% of all the circulating Bitcoins (594,280 BTC)
3) 2,156 addresses own 39.06% of all the circulating Bitcoins (7,327,410 BTC)
4) 98.8% of addresses own less than 1 BTC
4) Exchanges (All Cryptos)
- Total exchange volume (24 hours): $184.55 Billion
- Total spot exchanges: 307
Largest Exchanges Today (based on 24 volume)
1) Binance
2) Huobi
3) Coinbase Exchange
4) FTX
5) Kraken
5) ETF's/ Funds who own BTC
Total BTC holdings from Funds/ETF: 872,880 BTC ($27.93 Billion at todays value)
Funds: 830,781.72 BTC
ETF's: 42,099 BTC
Largest players:
1) Grayscale Bitcoin Trust: 654,885 BTC
2) Coin Shares: 55,703 BTC
3) 3iQ Fund: 23,500 BTC
4) ETC Group: 20,813 BTC
5) Purpose Bitcoin ETF: 19,052.54 BTC
6) Mining Pools/Companies
We can't measure their Bitcoin holdings because most pools do not file their holdings. So we can look at their mining power and rank their dominance in terms of production:
1) F2 Pool (China): 16% of all blocks
2) Ant Pool (China): 14% of all blocks
3) Poolin (China): 13%
4) ViaBTC (China): 11%
5) Binance Pool (Malta): 9%
CBDS's
Central Bank Digital Currencies are governments' way of competing with the new digital financial system. They allow young companies to disrupt and innovate the existing financial system so they can license the new innovation for themselves. These new digital currencies will be faster and easier to transact, making them competitive to the crypto landscape.
- Number of countries building CBDC's: 60+ are currently working or researching a CBDC solution.
Top countries pursuing CBDC's:
1) China (E-CNY or DC/EP)
2) Bahamas (Sand Dollar)
3) Cambodia (Bakong Project)
4) Ukraine: E-hryvnia
5) Uruguay: (E-Peso)
Concept of "Money on the Sidelines"
* Its impossible to measure money on the sideline since there are no publishing requirements for people "thinking" about buying something.
Central banks, pension funds, sovereign wealth funds, family offices, hedge funds, R/P funds etc... collectively have 100's of billions of assets to invest. This money is either sitting in cash or gold, and as Bitcoin's popularity grows we can see inflows from these intuitions into Bitcoin.
When Bitcoin broke the $1Trillion market cap barrier it attracted a lot of governments to pay attention and start building strategies to get involved. This most recent dip is providing the perfect opportunity for those institutions to pile in early and let the market do the rest of the work for the.
Hodlers vs Traders
The biggest support system that Bitcoin has are the people who refuse to sell their coins. Large institutions in the public eye have pledged to hold their Bitcoin, providing a stable demand for coins. This stable demand is CRUCIAL for Bitcoins survival because it allows the market to develop while the price remains stable.
For example Institutions such as Grayscale, Microstrategy, and Tesla have admitted to buying Bitcoin and vowed not to sell it.
Having players like this who support the system and create price stability is crucial for the development of the community and as long as the big whales hold...the market is alive and well.
Conclusion
The amount of money sitting on the sidelines is at record levels. As long as these global institutions continue to hold their Bitcoin it will build confidence and attract new money to come in.
Several years ago there was still uncertainty surrounding BTC's adoption by governments and major funds. Seeing the amount of interest and commitment that exists today is a testament that Bitcoin has come a long way and is still in its early stages.
The next Bitcoin bull run will be as a response to money printing, inflation, monetary policy, or some combination of the 4. Smart investors are dollar cost averaging in this correction phase and loading up for the next bull run to happen. Whether its 30K, 27K, or 21K, Bitcoins value will always outpace its price...its always a good time to own BTC.
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