Two research firms recently released findings that shows that over one-third of the Bitcoin currently in circulation is lost.
According to Chainalysis and Diar, 36% of all BTC in circulation is either “lost, likely lost, or unmined.”
Public data shows the total circulating supply of the leading cryptocurrency stands at 17,298,925 BTC. According to the Bitcoin protocol, a maximum of 21 million Bitcoin coins can be mined.
When bitcoin in circulation are lost, there is less accessibility and therefore demand should push the price of BTC higher thus creating a premium.
One of the main characteristics that make bitcoin a superior store of value over traditional assets such as gold is its fixed supply. The fact that now a lower amount of bitcoin is accessible should drive the value of the cryptocurrency up in the long run.
Who is holding bitcoin?
Another key important finding of the study was that between December 2017 and April 2018, long term investors sold approximately $24 billion of bitcoin to new speculators, with half of this activity according in December alone.
This unprecedented injection of liquidity served as a fundamental driver behind the price decline during the same period. At the moment speculators hold 23% whilst investors hold 30% (see full figures below).
What is encouraging however, is that both investors and speculators held their positions over the summer period and this resulted in more price stability compared to the previous months.