Blockchain analysis is conducted for proper investigations and compliance. In addition, studying analytical results users are more aware of the cryptocurrency markets to be sure in their investment decisions. Nobutake Suzuki, President and CEO of MUFG Innovation Partners, says, ‘Chainalysis’ compliance technology is important to providing the insight and anti-money laundering controls banks need in order to establish next generation compliance frameworks.’ Let’s have a closer look at the result of their work.
Only 20% are on trade
The Chainalysis company provide blockchain data and analysis to government agencies, exchanges, and financial institutions across 40 countries. Company’s investigation tools, education, and support help to understand what is happening on blockchains. Recently Chainalysis has estimated that 60% of all issued Bitcoins are at the disposal of long-term investors. Another number of the share concerns those that are actively traded or were lost, and that is 20%.
Researchers related the owners of the first cryptocurrency to holders who never reduced their position by more than a quarter. The company considers lost Bitcoins the ones that have been stored on inactive addresses or forgotten wallets for more than 5 years. The category also includes belongings of Satoshi Nakamoto. Speaking about the rest 19% of all mined Bitcoin, it moves frequently, primarily between exchanges, which they label as Bitcoin used for trading.
Active retail traders
They account 96% of the actively traded 3.5 million Bitcoins by retail traders, to whom Chainalysis attributed those whose transactions in value terms do not exceed $ 10,000. According to the company, since 2018, 83% of all transfers in this category to Bitcoin exchanges have accounted for less than $ 1,000. The analysts state that professional traders are the most significant participants in major market movements, such as those observed during the March collapse.
However, their number is small, on average they have made 39 thousand transfers of funds to and from exchanges. What concerns the greatest part of 60% of Bitcoins, they are stored in a licensed custodian service or virtual asset service providers according to FATF terminology. The growing dominance of VASP is confirmed by the fact that of the remaining 40% of available Bitcoins that are not related to custodial services, 87% were somehow connected with them in the past. They were either stored there or acquired.
Binance, Huobi, Coinbase, and Bitfinex have been four largest exchanges since 2018. They took in 40% of all Bitcoin received by exchanges in 2020. The next ten exchanges received 36% collectively. The rest is left to hundreds of other small exchanges with the remaining 24% of transfer volume. There are several types of exchanges. They are the ones supporting only crypto-to-crypto (C2C) transfers and crypto-to-fiat (C2F) transfers and vice versa, and those solely providing cryptocurrency derivative trading. C2F exchanges dominate in 74% of all exchange transfers by volume.
The analysis shows that there is a large variance in trade intensity between exchanges. A number of factors influences the intensity. One among them is the number of cryptocurrencies to trade with Bitcoin on exchanges. Also higher intensity indicates that more traders are storing their assets in the long-term prospective. At the same time, exchanges facilitating OTC trading are often characterized with lower trade intensity. The reason is that their trades are not recorded in spot trading data.