- The divergence between transaction count and transfer volume in May indicated that retail investors were dominant.
- The number of coins in self-custody continued to rise steadily.
The crypto space was wrecked by one of the biggest implosions ever in May 2022 – the collapse of Terra [LUNA] token, marking the beginning of the bloody bear market. Prices of top digital assets went downhill and were yet to recover from the shock.
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Typically, situations like this put to the test the resiliency of individual investors who are the first to leave the market out of concern for further losses. Surprisingly, this hasn’t been the case.
Retail holders of Bitcoin [BTC] i.e. addresses holding less than 10 BTC, have increased their relative share of the circulating supply from 13.7% following the LUNA collapse, to 17.54% as of 13 June, according to on-chain analytics firm Glassnode. This amounted to an increase of 790,000 BTC for their portfolios.
Source: Glassnode
What’s fascinating to note is that this cohort, composed of Shrimps (holding less than 1 BTC) and Crabs (holding between 1-10 BTC), saw another sharp increase in its share after the FTX bankruptcy episode. Among other factors, this was indicative of increased demand for self-custody.
Smaller entities gain prominence
A big criticism of Bitcoin since its inception has been its lack of utility which has deterred individual investors from actively participating in the network. This cohort, however, has jumped on board with greater enthusiasm in 2023 after the Ordinals protocol made mass-minting of both fungible tokens like BRC-20 and non-fungible tokens (NFTs) possible.
As evident from the graph below, Bitcoin network witnessed an unprecedented spike in daily transactions last month, to such an extent that top exchanges had to suspend withdrawals owing to high transaction fees.
Now, while the transaction count was up, the transfer volume i.e., the total number of coins transferred was disproportionately low. This meant that the frenzy was driven by low-value transactions executed typically by retail holders of the coin.
Source: Glassnode
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Self-custody steadily rises
After a brief elevation to $26,000, BTC fell back to $25,877.11 at the time of writing, as per Santiment. The coin has shed 5.85% of its value over the past month. Despite this, the number of coins in self-custody has gradually risen in the same time. This is indicative of the network-wide accumulation trend.
Source: Santiment