Key Metrics Show Unprecedented Stagnation

The number of Bitcoin addresses holding more than 0.1 BTC has decreased by 2.3% since its peak in December 2023. This is the first time in the history of the Bitcoin network that this metric has suffered a net two-year decline. The stagnation may be due to the growing popularity of ETFs and the security practice of distributing BTC across multiple addresses.

Since 2009, the year the Bitcoin network launched, the number of unique addresses holding a balance greater than 0.1 BTC had consistently increased every year until 2023. However, over the past 24 months, this key cohort of retail and medium-sized investors has shrunk, marking a historic milestone of stagnation.

Market data indicates that the number of addresses holding more than 0.1 BTC (an amount that has historically represented an investment of several thousand dollars) dropped from a peak of 4,548,107 on December 8, 2023, to 4,443,541 on the same date this year. This 2.3% decline is unprecedented over a two-year period and is significantly worse than the mere 0.7% decrease observed in smaller wallets (holding 0.01 BTC).

The trend shows a plateau through a large part of 2024, followed by a decline that led this metric to its lowest point in two years. At first glance, the figure seems to indicate a decrease in the number of investors choosing to keep these balances in personal wallets such as Ledger or Trezor.

Key Factors: From Direct Adoption to Financial Vehicles

The apparent decrease in 0.1 BTC Bitcoin wallets raises the question of whether there are truly fewer people investing in Bitcoin. The answer is complex due to the evolution of the financial landscape. Unlike the early days of the network, exposure to the price of BTC is now obtained through thousands of financial proxies, including Exchange Traded Funds (ETFs), derivatives, and treasury companies.

These new vehicles, especially ETFs that meet retirement account requirements, allow investors to gain Bitcoin exposure without directly owning the asset in an on-chain address. This means that the Bitcoin traded through ETFs and other centralized products is commingled in a few large custodian wallets, making it impossible to disaggregate the holdings per person.

In addition to financial vehicles, security practices have also evolved. Experienced investors are adopting more sophisticated methods to protect their holdings, such as distributing their BTC across multiple addresses controlled by a single private key (using extended public keys) or using decoy wallets.

These practices make holding an individual balance greater than 0.1 BTC in a single address unnecessary, regardless of the investment size. Therefore, while the stagnation of the 0.1 BTC Bitcoin wallets provides a unique insight into user behavior, it does not necessarily indicate lower overall adoption, but rather a change in the way investors choose to store and access their Bitcoin.