Corporate Finance News

Mercredi 1 Juillet 2020

Retail investors set to sweep up diminishing supply of Bitcoin

Current trends indicate that new market supply will not meet future demand

A report on intentional holdings of Bitcoin published today by digital assets derivatives exchange ZUBR, shows that, if current investment trends continue, daily demand will dwarf the new market supply of bitcoins mined after 2028, when the reward declines further.

Exclusive data from the blockchain and market analytics firm, Chainalysis, was used to analyse whether there was a growth in wallet addresses (or accounts) that could be viewed as “intentional holdings” (addresses which held 1-10 rounded bitcoins).

The research shows there has been continuous growth in these addresses – despite market fluctuations and volatility. In fact, there were only five occasions since the first “genesis” bitcoin was mined where the number of bitcoins in these addresses had decreased month on month.

Ilgar Alekperov, CEO, ZUBR said: “At the current steady rate that retail is accumulating Bitcoin, the new market supply will not be enough to address retail demand, let alone institutional investor demand.

“Although Bitcoin is still emerging when compared to traditional commodities such as gold, this research proves that there is a growing belief in Bitcoin’s long-term investment case as a real store-of-value. It’s fair to say, that it’s this continued belief which could ultimately see it become a reality.”

Key findings from the report include:

• Despite global market volatility, these precise rounded addresses have grown by 11% since the start of 2020, and have yet to see a single month in decline.
• As of April 2020, the number of these addresses surpassed 500,000. They have been growing every month since the start of the 2018 bear market after the price of Bitcoin hit its peak with the exception of a single month.
• These addresses, and total Bitcoin held within them, only account for 2.5% of the total circulating supply. With that being said, the annual average growth rate year-on-year for these specific addresses alone has increased at a steady 1 to 1.5% since 2014.
• By the time the next reward era comes around in 2024, retail could potentially account for over 50% of the physical supply.
• With the supply limits currently known, new Bitcoins through the mining reward might become fully absorbed by retail investors, unless price heavily weighs-in over the coming years.
• Constraints on physical bitcoin supply could have the same effect on price as it once had with gold.
Ilgar continued: “While ZUBR focuses on the institutional market, it’s really important that we look and reflect at the retail trends as crypto is still a retail-led market, and this will ultimately dictate investor appetites and behaviour.”

You can read the full report, ‘Retail Investors Steady in Physical Bitcoin Snatch-Up’, here:

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