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Bitcoin Wallets Holding At Least $1K Are Growing in 'Positive Trend': Fidelity

2024-04-25 05:36:02

There are more Bitcoin holders than ever—each individually smaller than a shrimp yet whale-like in aggregate.

In a report released Monday, Fidelity Digital Assets highlighted the growing number of Bitcoin addresses containing at least $1,000 worth of BTC, calling it a “positive trend of growth.”

This constituency grew to an all-time high of 10.6 million wallets in mid-March, the analysts wrote, the milestone representing a 100% increase from 5.3 million Bitcoin addresses in 2023.

“This may be representative of a growing distribution of Bitcoin and its adoption among the ‘average’ person,” the analysts wrote, adding that the metric indicates “growth of small addresses accumulating and saving Bitcoin, even with rising prices.”

However, Fidelity cautioned that the metric is not 100% accurate because of Bitcoin’s price appreciation and address consolidation during the period. As of this writing, $1,000 buys approximately 0.016 Bitcoin, according to CoinGecko.

Within crypto circles, a marine hierarchy is often used to describe Bitcoin holders: a “whale” is an address holding at least 1,000 Bitcoin, while a “shrimp” at the opposite end of the spectrum holds at least one Bitcoin. Based on the marine food chain, those that own between zero and one Bitcoin could perhaps be dubbed “plankton.”

The short-term outlook for Bitcoin is, overall, pretty positive, Fidelity’s analysts wrote, presenting myriad ”long-term” data points. Of 16 metrics for Bitcoin tracked, a quarter of them were deemed “negative” or “neutral” conditions, while half of them were “positive.”

A list of conditions impacting Bitcoin long-term. Image: Fidelity Digital Assets

Another indicator tracked in the report looks at how much Bitcoin is held on crypto exchanges. A multi-year downward trend continued in the first quarter of 2024, Fidelity wrote, falling 4.2% to 2.3 million Bitcoin—30% below a peak of over 3 million Bitcoin held in 2020.

The report carried another caveat, however, noting that “this does not necessarily equal an increase in self-custody.” The authors noted that custodians like Fidelity are working on solutions that allow customers to control their keys while trading through exchanges.

One “negative” indicator of note: historic levels of paper profits for Bitcoin holders. Over 99% of Bitcoin addresses were in the green by the end of the first quarter, analysts wrote, explaining that “as the number of addresses in profit grows, a sell-off could become more likely as traders and newer investors look to realize profits.”

Edited by Ryan Ozawa.