Amount of Bitcoin in active wallets is growing
The amount of Bitcoin (BTC) held in active wallets is near a record high, industry website Coindesk has reported, citing a new study.
According to the media report, analytics firm Chainanalysis announced today that some 4.8 million Bitcoins were held in personal wallets with some level of transactional activity as of August 31. The amount, which represents approximately 32% of the all Bitcoins in existence (minus lost coins), is significantly higher than the 3.8 million, or 26%, that were possessed by individuals at the end on 2017, Coindesk notes. Notably this figure is also just shy of the all-time high on 4.95 million that was recorded in the month of July.
According to Chainalysis economist Philip Gradwell, these numbers are indicative of a greater liquidity in the current Bitcoin market.
“There are more people who are holding crypto personally,” Gradwell told Coindesk in an interview. He went on to say that this meant that “there’s a much larger supply that’s liquid”, adding that “lot of the people who bought [this year] are buying smaller amounts”.
“They are ready – if things were to change, [if] the opportunity to spend it were to arise – to actually spend it. We’ve kind of overcome the first hurdle of adoption, getting bitcoin into people’s hands,” he said, as quoted by Coindesk.
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Many Bitcoin sceptics have expressed doubts over whether the cryptocurrency could ever become an effective medium of exchange, citing not only the coin’s significant volatility, but also the fact that the majority of BTC owners prefer to hoard virtual coins in hopes of long-term gains, rather than spend it on a daily basis. This has been the case for a long time, but Chainanalysis recent data shows a decline in the number of Bitcoins held strictly for investment purposes. As of August, 2018, 6.38 million Bitcoins were held as investment coins, compared to just over 7 million at the end of 2017.
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In his interview with Coindesk, Gradwell suggested that the emergence of solutions such as the Lightning Network could boost Bitcoin’s potential as a medium of exchange, by turning more BTC holders into spenders.