HODL No More? The Amount of Bitcoin In Active Wallets Is Near a Record High

An increasing amount of bitcoin is being held by active individual users, rather than companies and long-term investors, according to new data from Chainalysis.

Announced Monday, the analytics firm found 4.8 million bitcoin, or roughly 32 percent of the protocol's cryptocurrency supply, was held in personal wallets with some level of transactional activity as of August 31.

Speaking to that potential, Gradwell said technical solutions aimed at improving bitcoin - like the much-lauded Lightning Network, which could enable faster payment processing options for merchants and service providers - could tip the scales for users deciding whether to transact with bitcoin or cash out during the next bull market.

To be sure, bitcoin is still predominantly held as an inactive investment, whether custodied by an institution or individual, with 6.3 billion held in accounts that had no activity in over a year, according to Chainalysis data.

Whether bitcoin users are transacting with personal wallets or exchange accounts, Chainalysis economist Kimberly Grauer said the monetary aggregates for these categories have stabilized, suggesting news articles don't spur as much dramatic trading activity as they did last year.

Further, Chainalysis found that, from August to December, the amount of bitcoin held by service providers like exchange platforms increased by just 93,299.

When viewed in light of the roughly 1 million bitcoin added to personal wallets over the same period, this implies the number of people using self-custody solutions is increasing at a faster rate than that of mere speculators.

Gradwell described the current state of bitcoin wealth distribution as slightly more diverse, in part, thanks to long-term investors selling to new speculators late last year and earlier this year.

Out of roughly 28.5 million bitcoin wallets across the market, he estimated only 150,000 of them hold more than 10 bitcoin each.

"Half of available bitcoin is still held by investors, but it has gotten somewhat less concentrated."