Categories
Crypto News Updates

Why Bitcoin Is Nowhere Near The Top This Year

Bitcoin has a long way to go in this bull market, and the rest of the year looks bright.

Despite bitcoin’s meteoric rise of over 550% this year, on-chain analysis paints a picture of it still being early in the game. Why? Three words: Coin Days Destroyed (CDD).

Nowhere Near The Top This Year

By assessing CDD, we can visualize the confidence among long-term bitcoin holders relative to the current price of bitcoin.

To understand how CDD works, let’s start with coin days.

What Is A Coin Day?

Coin days are the number of days since a bitcoin was moved over from one wallet to another. The logic behind them is to assign a higher value to an idle coin. Why? Because long-term bitcoin holders have greater knowledge of market cycle volatility and thus are more adept at identifying the best times to buy or sell.

So when long-term holders sell their bitcoin, the Coin Days Destroyed will surge higher. When strong hands hold, CDD trends lower which suggests their confidence in a new bull market.

What Are Coin Days Destroyed?

Coin Days Destroyed is a term for when bitcoin that’s been sitting in a wallet—accruing coin days—is all of a sudden sold, causing those coin days to be “destroyed.” Importantly, bitcoin is not actually destroyed. CDD is simply terminology that calculates the time erased.

Here’s an example: Imagine an investor purchases 1 bitcoin and holds it in their wallet for 90 days, then sees a big increase in the price and decides to sell. He would have “destroyed” 90 bitcoin days.

When investors are accumulating (and few old coins are spent), Coin Days Destroyed will trend downwards. During late-stage bull markets, old coins often are increasingly spent and will lead to a spike in Coin Days Destroyed.

The beauty of this formula: It weighs less on the activity of short-term traders. Since these traders don’t hold bitcoin for long, their impact on Coin Days Destroyed will be minimal as compared to the activities of long-term traders.

However, when long-term holders are starting to sell their bitcoin, it’s worth paying attention to.

When we look at these important metrics, it appears that bitcoin is nowhere near its high this year. Bitcoin is now over $40,000 but the 90-day moving average for Coin Days Destroyed is near its lowest levels. See the chart below:

The decline in Coin Days Destroyed shows that old hands are stronger than ever amid the price increase.

How Is CDD calculated?

Coin Days Destroyed is calculated by:

  1. The number of bitcoin in a transaction
  2. Multiplied by the number of days since those coins were last spent.

The “destroyed” part comes into effect when it is removed on receipt. Once again, it means the coins held for long periods of time will carry more weight in CDD.

This on-chain metric shows the weight of the strong hands versus the short-term speculators.

The current number of Coin Days Destroyed is far lower than the 2017 price top. So, this indicates that fewer veteran hands are selling than in the previous bull cycles.

Considering the Bitcoin network is now 12 years old and the current BTC supply has already appreciated, it’s telling that strong hands are not selling their holdings. This suggests that the market top is nowhere near our current price.

What’s more, the higher demand from institutional investors could be the primary force behind this recent surge in long-term confidence from veteran holders.

In April, Fidelity Investments, with $10.3 trillion in assets under management, introduced an analytics platform capable of on-chain Bitcoin data visualization for its institutional clients called “Sherlock.” Wells Fargo is also preparing to embrace bitcoin investing, as it announces it will offer an actively managed cryptocurrency product.

These moves by high-profile asset management firms underscore the rise of institutional investors who are banking on the future growth in Bitcoin.

This is a guest post by Portfolio Insider. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.

Source: Bitcoin magazine

Categories
Crypto News Updates

How Many Bitcoin Wallets Hold More Than $1 Million?

The number of “bitcoin millionaires” is booming, but there’s still a lot of room for growth, which will propel the bitcoin price as well.

Bitcoin has come a long way since its inception in 2009. With bitcoin’s market capitalization at just over $1 trillion, new on-chain data reveals that the number of millionaire members of the bitcoin rich list have ballooned.

But what is the “bitcoin rich list” and why should you care?

The bitcoin rich list refers to the list of bitcoin addresses that hold over $1 million worth of BTC. Since January 2021, over 100,000 wallets have met the qualification. Notably, the number swelled by 400% from just 25,000 millionaires five months ago.

Source

However, the list is not as large as it is often portrayed to be. And it looks like the upside has a long way to go because of two simple facts.

First: There are approximately 46.8 million millionaires in the world holding at least $158.3 trillion of wealth — a number of fiat millionaires that clearly dwarfs the 100,000 bitcoin millionaire wallets.

In comparison, there are little more than 100,000 addresses with over $1 million worth of BTC and only 9,370 with over $10 million as of March 2021. 

Source

Second: The number of around 100,000 accounts holding over $1 million doesn’t mean each account is owned by a unique person. Why? Of course, individuals can own multiple bitcoin addresses.

After all, you can use on-chain analysis to find out how many bitcoin accounts exist and how much is in each account. But you can’t see who owns those accounts.

So, the actual number of bitcoin millionaires is almost certainly lower than 100,000 if you assume some of these addresses are held by the same individuals.

The small number of bitcoin millionaires (just 0.2% of the 46.8 millionaires in the world) offers a perspective that we are still in the early innings with bitcoin’s adoption rate. As more millionaires diversify a percentage of their wealth from fiat to bitcoin, the asset’s price can go even higher.

Another Catalyst For More Millionaires Owning Bitcoin In The Future

Banks are the key catalyst that can drive up the total net worth held in bitcoin. Namely, more banks are offering institutional services for bitcoin that would allow high-net-worth clients to easily own bitcoin within their current bank accounts.

Hundreds of smaller banks have already signed on to offer regulated funds for bitcoin. As a result, giants like JPMorgan Chase & Co. and Bank of America could face pressure to offer bitcoin to their retail banking customers.

Bitcoin is also gaining traction in the private wealth management industry, which handles trillions of dollars for high-net-worth clients.

In March, Morgan Stanley, a giant in wealth management with $4 trillion in client assets, told its financial advisors that it is launching access to three funds that enable exposure to bitcoin. A few weeks later, Goldman Sachs and JPMorgan followed with their own statements about launching bitcoin services for their private clients.

Moreover, U.S. Bank, which is part of U.S. Bancorp, the fifth-largest bank in the United States, announced it would offer a cryptocurrency custody product with the engagement of a sub-custodian for fund servicing.

Bottom line: With a growing number of banks making it easier for high-net-worth individuals to buy and sell bitcoin, the number of their private client millionaires investing in bitcoin could skyrocket in the future. Bitcoin’s price may follow, as well. 

This is a guest post by Portfolio Insider. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Source: Bitcoin magazine