Investors prefer to keep their bitcoin holdings in hot wallets instead of cold storage despite the risks
Despite the decentralised purpose of bitcoin, it seems that only a few addresses hold a major share of the digital currency’s total supply. This is according to data collected by crypto trading simulator Crypto Parrot.
As of June 14 2021, bitcoin held by the 10% richest addresses equated to over 18.5m.
This amount of bitcoin represents more than 99% of the entire circulating bitcoin supply as many coins have not yet been mined.
Counting the digital currency’s eventual maximum supply of 21m, the amount held by one tenth of the addresses would equal 88.37%.
While bitcoin’s anonymous nature makes it difficult to determine the identity of the holders, it is likely they are high net worth individuals and entities. Exchanges and institutions fall into this category.
With exchanges ranking in this category, the report highlights the implications of the scenario. According to the research report: “This is an indicator that investors prefer to keep their bitcoin holdings in hot wallets instead of cold storage despite the apparent risks. Besides exchanges, other large bitcoin holders are likely to be funds, custodians, and other high net worth individuals.”
Therefore it would appear that the bitcoin whales still account for a massive influence on the asset’s price movement.
Earlier this week bitcoin closed in on $40,000 as El Salvador announced that the cryptocurrency is now legal tender in the central American country.
A number of south and central American nations have hinted at being willing to follow El Salvador’s lead, while more recently, Tanzania’s leader Samia Suluhu Hassan has urged the country’s central bank to prepare for the digital currency.
India may soon classify bitcoin as an asset class, according to a report, after it initially took an unwelcoming view of the digital currency.
Industry sources have suggested, according to a report from The New Indian Express, that the government will make moves soon while the Securities and Exchange Board of India (SEBI) will oversee regulations as the classification for bitcoin is changed.
The report added that India’s crypto experts have held talks with the finance ministry over the construction of new regulations.