Distribution of Bitcoins remains unchanged after FTX, remains very heavy with the domination of whales

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By now, we all know the sordid story of Mr. Bankman-Fried, the former crypto whiz who is now under house arrest in the all-too-comfy California home owned by his parents.

While the debacle may be old news, unfortunately for crypto investors, the staggering collapse continues to take its toll. The latest is Genesis, the crypto lender that filed for bankruptcy, which owes $3.5 billion to its top 50 creditors.

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Here I want to focus on how the events of the past two months since this last crypto scandal have affected the distribution of Bitcoin. Because the beauty of blockchain is that we can track addresses across the network, see how the 19.27 million bitcoins currently in circulation are distributed.

Bitcoin addresses holding less than $1,000 fall

The first consequence of the collapse was the fall of small addresses holding less than $1K. These addresses are often referred to as “shrimps”, that is to say small fish.

38.7 million addresses held between $1,000 and $1,000 worth of crypto during the fall of FTX, which fell to 38.1 million after FTX. It’s not the biggest move in the world, but considering that the price of bitcoin also dropped 20%, there were probably wallets above $1,000 that fell into this basket because bitcoin worth less in US dollars.

Nonetheless, this highlights that the small fry were selling off after the FX collapse, with the accumulation not returning until January. Again, it’s worth noting that addresses with less than $1,000 worth of bitcoins represent only 2.84% of the total supply.

Holders between $1,000 and $10,000 rise

Interestingly, the pattern was quite similar with the number of wallets holding $1 million or more worth of Bitcoin. For once, whales and fish were in unison, it seemed.

Interestingly, I’ve seen the opposite trend when looking at wallets holding between $1,000 and $10,000 worth of Bitcoin. There was a noticeable slight uptick right after the FTX crash, which then slowed down in January as the market rallied.

Again, it’s a little hard to know what to make of this because the price of bitcoin has gone up so much, meaning many of the wallets previously listed here may have just been moved to the next category, but it’s is definitely the outlier because all other denominations show the opposite effect. 4.6% of Bitcoin supply is contained in wallets containing between $1,000 and $10,000 worth of Bitcoin.

The distribution of Bitcoin remains uneven

You may have noticed that the numbers I threw out above for the percentage of Bitcoin supply held in small wallets are quite low. Indeed, Bitcoin has quite a heavy distribution.

Less than 6.5% of the supply is contained in portfolios that hold less than $10,000. Meanwhile, more than half of the total supply, 51.8%, is contained in wallets containing more than $10 million. Expanding to look at all wallets holding more than $1 million worth of Bitcoin, that figure rises to 70% of the total supply.

Data shows that while Bitcoin is decentralized, the distribution of its coins is not. Whale wallets dominate, which is a consequence of Bitcoin being so cheap in its early days before suffering such a price spike.

Throwing $500 or $1000 into Bitcoin just seven or eight days ago would give you jaw-dropping returns, and that’s why we see the existence of these massive whale wallets.

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