Share of “Speculative Bitcoins” Still Close to Record High, Study Says

More and more Bitcoins are stored in the crypto wallets belonging to active individual users rather than institutional investors and companies, new Chainalysis study found as of August 2018. The analytics firm said on Monday that about 4.8 million Bitcoin, which represents about 23% of the total coin’s supply, was held in wallets with at least some level of activity. The speculative coins, as the category was labeled, represent about a third of the total supply excluding lost coins.

Chainalysis analyzed the coins based on their liquidity and movement, and tried to find specific patterns that would define distinctive groups of investors, like speculators or holders. The firm used the same concepts that central banks and experts use to determine the supply of fiat money. Thus, Chainalysis analyzed Bitcoin by defining several aggregates and defining them as M0, M1, M2, etc., depending on the liquidity level. Accordingly, M0 is the most liquid group of Bitcoins, as the latter are used for transactions on a regular basis (speculative coins). Next, M1 represents service transactional coins, while M2 has been divided into two subgroups making reference to investment coins and lost investment coins. Finally, M3 stands for lost coins, which is the least liquid group of BTC. Earlier, Chainalysis found that about 4 million Bitcoin might be lost forever.

Here is the distribution of these aggregates as shown by Chainalysis (in millions Bitcoin):

In its earlier report, Chainalysis found that over the period between December 2017 and April 2018, new speculators pushed the M0 indicator up. However, in the summer months, all the aggregates noted some stability, with the speculative group maintaining record high levels.

Recently, a study by Satis Group, called “Crypto Asset Market Coverage Initiation: Trading & Custody,” predicted that the cryptocurrency trading volume would grow over 50% through 2019, with an overall Compound Annual Growth Rate (CAGR) growth of 9% through 2028.