Of more than 30 million Bitcoin-owning addresses, the Top 100 hold one seventh (14.3%) of all Bitcoins. Some believe Bitcoin (“BTC”) will solve wealth inequality. I am not so sure about that. But wealth inequality was not the subject of this analysis. My intention was only to see what I could learn from an analysis of the Top 100 Bitcoin addresses as they are provided at bitinfocharts.com.
My first observation was that the richest Bitcoin address was less rich than I expected. It is worth just under $2.5 billion and it is the only billionaire Bitcoin address. I suspect there are a few and maybe several more Bitcoin billionaires in the form of individuals who hold multiple addresses with balances that combine to over a billion dollars, but that is mostly speculation based on connecting addresses with first or last “in” or “out” dates that are the same. I will explain what those terms mean in the next paragraph.
My first really interesting observation was that 60 of the top 100 addresses had never once made an “out” (Figure 1). As the words suggest, an “out” is an occurence of BTC moving out of the address and an “in” is an occurence of BTC moving in. This can be thought of similarly to a “buy” and a “sell”, respectively, with the nuance that an “in” can come from mining (basically, earning) the Bitcoin or simply transferring it in to one address from another address (the latter would show an “out”). Those addresses could be owned by the same person or entity and so an “in” is not necessarily synonymous with a “buy”, but I do not think there is much harm in thinking of it as about the same. So isn’t it interesting that 60 of the Top 100 addresses have zero “outs”? These addresses have bought, earned, or transferred in BTC, usually on many occasions, but they have never once sold or made an “out”. This seems to support the thesis that Bitcoin believers are in it for the long haul. At the very least, it seems the majority of the richest ones have held absolutely and without exception thus far. But if Bitcoin is going to have a lasting impact, these are still early days for the decade-old technology that some call “digital gold”.
It is even earlier days for many of Bitcoin’s largest owners. This was my second interesting observation. It turns out that most of the addresses in the Top 100 made their first “in” sometime after the beginning of the year 2018 (Figure 2). This is where it is important to recognize the difference between an “in” and a “buy”. It is possible that many of these addresses with first “ins” in 2018 or later received funds transferred in by individuals or entities that have held those funds in other addresses for much longer. I have no reason to believe this to be true. I am simply acknowledging it as a possibility.
Setting that caveat aside, one can assume that “big money” or what is commonly called institutional interest in Bitcoin has been greater than ever since 2018, and great enough to gain enough Bitcoin to displace older holders in the Top 100. The lowest price and best buying opportunity since 2018 was around $3,400. Bitcoin has spent the majority of the time since 2018 at a price between $6,000 and $10,000. At the current price around $9,300, it stands to reason that most of the Top 100 Bitcoin addresses “first in” since 2018, which is most of them, have not appreciated in value by more than 50%. To be up more than 50%, an address’ average “in” would have to be lower than $6,200 per Bitcoin.
Qualitatively, it does not seem as though these are addresses of individuals who have become rich off Bitcoin and are now holding because they are playing with house money. It seems that most of these addresses are probably closer to being flat or down money than they are to being up double or more on their initial investments. By that logic, these addresses are not “in” because of what Bitcoin has done. They are “in” because of what they believe Bitcoin is going to do. Thus far, they are looking exceptionally patient.
The tendency of Top 100 addresses to have been “first in” in 2018 or later is made even more interesting by looking at their “last in”. Without exception, every address in the Top 100 has had at least one “in” in 2020 (Figure 3). Regardless of anything that makes them different, the Top 100 seem to have this one thing in common. They are all getting “in”. I was curious to see how far this fact extended so I looked further at the Top 1,000. By my count, there are only 7 addresses out of the Top 1,000 that have not gone “in” within the last year, and all 7 of them bought between March 2019 and a year ago. This was surprising for me to see.
The Top 1,000 owns nearly 6.5 million BTC. That is more than one third (34.8%) of all the BTC in the world. It has been estimated that approximately 4 million BTC out of the 18.3 million existing (and 21 million that will ever exist) are out of circulation and gone forever. If that is true, then these Top 1,000 addresses own nearly half (44.5%) of all BTC and not a single one of them has failed to add to their balance at least once in the last 16 months. This would be unbelievable to me if I did not come to the conclusion myself based on the available data.
Bitcoin is not a company but it has a $173 billion market cap (total value) and so its largest addresses can be compared in some sense to the largest shareholders of a multi-billion dollar market cap company. The largest shareholders of multi-billion dollar companies, let alone $100 billion companies, are usually taking some of their chips off of the table at that stage, not unanimously loading up. I should make it clear that I recognize that the fact that all of these addresses have made an “in” recently does not necessarily mean they are increasing their balances, but an “in” is an “in” and if they were overall intent on cashing “out” I would expect them to make only “outs”, not “ins”.
In summary, it seems that most of the biggest Bitcoin owners bought recently, are holding strongly, and are buying more, frequently.
This analysis of the Top 100 Bitcoin addresses adds to my conviction that it is the best investment I have made in my lifetime, but it is only a small factor. I hope to write more about Bitcoin in the future. Until then, I will appreciate any feedback, comments, or questions sent to firstname.lastname@example.org, especially by those who know something that I do not or see a flaw in my analysis.