HODL is not just a casual saying! Bitcoin in the secondary market only accounts for 19% of the total circulation.

According to the latest research report from Chainalysis, a cryptocurrency data research platform, only one-fifth of the total circulating Bitcoin is currently being actively traded in the market, with the rest being held by long-term investors and not circulating on the secondary market.

Only 19% of Bitcoin in Actual Circulation is Being Traded

According to a study byChainalysis, only 3.5 million Bitcoins (approximately 19% of the total circulating supply) are actively being traded on the blockchain. Chainalysis estimates that this 3.5 million represents the portion of Bitcoin currently being traded on secondary markets, meaning that the market price of Bitcoin is determined by these 3.5 million Bitcoins, while the rest of the circulating supply is categorized as "held for the long term" or "lost permanently."

The term "permanently lost" refers to Bitcoins in addresses that have not been active in transactions for five years or more, accounting for about 20% of the total circulating supply. On the other hand, "held for the long term" refers to Bitcoins in addresses that have been held for many years and have been active in transfer transactions, making up approximately 60% of the total circulating supply. In other words, 60% of the Bitcoins circulating in the market are held by long-term holders.

Distribution of Investors in the Trading Market

After classifying the circulating Bitcoins, Chainalysis further investigates who and how many are trading these 3.5 million Bitcoins. The study shows that since 2018, most of the Bitcoins transacted weekly are in the value range of $10 to $1,000 per transaction.

Chainalysis states:

"We classify retail investors as entities that deposit less than $10,000 worth of Bitcoin in a single transaction on exchanges, which seem to make up a significant portion, accounting for approximately 96% of all transfers sent to exchanges on average per week."

Although 96% of traders in the market are retail investors, the liquidity of the market is still dominated by professional investors. According to Chainalysis data, professional investors contribute to 85% of the total Bitcoin flowing into exchanges weekly.

Therefore, it is not surprising that professional investors are the trendsetters in the market. For example, in March of this year when the COVID-19 pandemic intensified in North America, a large amount of Bitcoin flowed into exchanges, leading to a significant drop in Bitcoin prices. According tostatistics, exchanges received a total of 1.1 million Bitcoins in just eight days from March 9th to March 17th.