An analysis of the concentration of ownership has revealed the risks of selling pressure for some popular cryptocurrencies.
What Happened: In a report published on FXStreet, analysts at IntoTheBlock calculated the ownership distribution of the circulating supply of Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH) and Dogecoin (CRYPTO: DOGE).
“To measure decentralization of ownership we use an indicator named Holdings Distribution Matrix which shows a breakdown of different groups of addresses according to the balance that they hold,” explained the analysts.
Bitcoin: In the case of Bitcoin, more than half of the circulating supply is held by users with less than 0.0001 BTC each.
“This reinforces the idea that most holders of BTC are not rich investors,” stated the analysts.
Over 2,000 individuals hold $200 billion BTC or 27% of the supply and just four single addresses hold more than 100,000 BTC each. IntoTheBlock believes these entities could be major crypto exchanges, and one of them could be MicroStrategy Incorporated (NASDAQ:MSTR) – the public company with the largest Bitcoin holdings.
Ethereum: Ethereum’s distribution matrix also points to a relatively unconcentrated distribution of supply. Over 70% of the total supply is held by investors with less than 0.01 ETH or $30 each.
“This is peculiar considering that ETH usage is not particularly cheap,” noted the analysts.
The matrix finds that seven addresses hold $72 billion in ETH, which represents around 21.69% of the supply. Three of these addresses are smart contracts used for DeFi and ETH2 staking, while another two are known to be centralized exchange addresses.
Dogecoin: “The most notorious insight about the DOGE distribution is how a single address holds more than 23% of the supply,” stated the analysts.
At current prices, this is worth more than $4.2 billion. Market participants have speculated that this address could belong to Tesla Inc (NASDAQ:TSLA) CEO Elon Musk or even be Robinhood Markets Inc’s (NASDAQ:HOOD) cold storage wallet.
Price Action: As of Friday morning, Bitcoin traded $41,500, down 4.5% in the last 24 hours. Ethereum was trading at $2,700, down 6% over the same period. Dogecoin was trading at $0.12, down 3.8% in the last day.
Photo by Kanchanara on Unsplash.