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In the letter
- Chainalysis writes that over three-quarters of Bitcoin mined is illiquid and / or with investors.
- Meanwhile, new buyers are entering the market.
- With less Bitcoin available for purchase, the price goes up.
At the end of the day, prices in open markets usually come down to two factors: supply and demand.
It’s no surprise, then, that Bitcoin’s recent surge – from less than $ 12,000 a month ago to nearly $ 18,000 today – is the result of strong demand against a backdrop of declining l ‘offer. But who wants it? And why exactly can’t they get enough?
New research from blockchain analytics firm Chainalysis indicates that institutional investors primarily need to thank (or blame, depending on your perspective) for the supply dryness and resulting price increase.
“While the total supply of Bitcoin grows daily as more and more are mined, the actual amount available to buy depends on whether holders want to sell or trade it,” he said. he writes in a blog post today. Currently, 77% of the 14.8 million Bitcoins that have been mined (but not presumed lost) are in illiquid wallets, which he classifies as a wallet that sent “less than 25% of Bitcoin than they ever received. “.
“This leaves a pool of only 3.4 million Bitcoin readily available to buyers as demand increases,” Chainalysis said.
It highlights corporate investments by Square and MicroStrategy as well as well-publicized statements by hedge fund manager Paul Tudor Jones as an indication of increased institutional investment.
This has benefited North American exchanges, which have seen an increase in Bitcoin net inflows since January 2020.
“This is what we would expect,” Chainalysis said, “as the institutional investors behind the current surge, themselves primarily based in North America and Europe, are more likely to buy gold. Bitcoin on these exchanges for ease of use and regulation. ”
And when they buy it, these investors keep it.
But they do it at a time when new everyday investors flock to the market (probably because they follow the example of institutional investors). The number of new Bitcoin addresses created each day nearly 25,000 earlier this week. And crypto-fiat exchanges – as opposed to crypto-crypto exchanges for traders – are also seeing an influx of Bitcoin.
“This, combined with the buildup of Bitcoin by investor portfolios that tend to hold for long periods of time, suggests that new Bitcoin buyers and buyers looking to offload fiat currency for Bitcoin as a hedge against macroeconomic trends worrying are responsible for much of the current demand, ”concluded Chainalysis.
Which makes sense. But did Chainalysis consider that maybe Maisie Williams orchestrated it all?
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