Bullish For Bitcoin: BTC Supply Slowly Shifts From Whales Toward Smaller Entities

Bitcoinist August 7, 2020
Updated 2020/08/07 at 7:20 AM
4 Min Read

New data shows that the amount of Bitcoin held by smaller entities has grown significantly. Meanwhile, during the same time, whale-sized BTC wallets declined by a similar margin.

Clearly, there’s been a sizable shift in supply, but what exactly does this crypto wealth transfer signify? And is this bullish or bearish for the first-ever cryptocurrency?

Supply Restrictions Give Cryptocurrencies Added Value That Isn’t Fully Understood

Out of all of Bitcoin’s unique attributes that give it inherent value, nothing compares to the asset’s hard-capped, 21 million BTC supply. Various supply-based valuation models have been developed that point to the asset achieving incredible valuations.

The theory is that due to the asset’s extremely limited supply, it responds favorably to economic inflation. The asset was designed from the ground up to perpetually increase in value and further reduce new supply until all 21 BTC are in circulation.


Every four years, the BTC block reward miners receive for securing the Bitcoin network is cut in half. This raises the cost of producing each Bitcoin, prompting more miners to hold the asset rather than sell at a loss.

The impact the halving has on the asset is thought to ignite each new markup phase and bull market. While this has been happening, not only has the flow of supply into the market changed, data shows that the BTC supply has changed hands significantly.

Small Bitcoin Investors Absorb Scarce BTC Supply From Early Whales And The Wealthy

All financial markets are driven by supply and demand; however, due to Bitcoin’s extremely scarce supply, its impact on demand and rising valuations is unique.

It more closely resembles gold due to its finite supply, but with the cryptocurrency, there is a hard cap along with several other key benefits over the precious metal.

Because the asset is so rare, with only 21 million BTC and is the top-performing asset in history, investors are more likely to hold strong for the long haul.

As time goes by, less and less BTC is being moved. What Bitcoin is on the move is typically moving away from exchanges and into wallets.

Control of #Bitcoin’s supply has been steadily shifting towards smaller entities.

The % of supply owned by entities holding ≤ 10 $BTC grew from 5.1% to 13.8% in 5 years, while the percent held by entities with 100-100k BTC declined from 62.9% to 49.8%.https://t.co/qbnCxejQHP pic.twitter.com/CHovVeBvXU

— glassnode (@glassnode) August 6, 2020

While this happens, the distribution and decentralization of Bitcoin are improving, which is extremely bullish for the cryptocurrency. According to glassnode data, the percentage of supply owned by entities holding 10 BTC or less has grown from 5.1% to 13.8%.

At the same time, whales holding between 100 to 100K BTC have reduced from 62.9% to 49.8%.


With whales commanding far less of the supply, it means the crypto market will be less susceptible to price fluctuations due to these high wealth actors. It also means that wealth generated by the cryptocurrency is becoming less centralized to just early holders and the rich.

Wider adoption and less influence by few means that Bitcoin is slowly but surely becoming a more stable and respected financial asset – which couldn’t be more bullish for the cryptocurrency.

Featured image from Deposit Photos.

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