Being in the top 1% of Bitcoin HODLers (holders) is an impressive feat. Currently less than 2% of the world’s population of 8 billion people own or transact in Bitcoin. If you’re in the top 1% of HODLers in an asset class that’s set to explode and gain massive adoption, you could truly be wealthy someday, if you’re not already. Bitcoin is a store of value crypto and the OG of all cryptos. But how many crypto enthusiasts hold Bitcoin? According to CoinStats, roughly 38%. I thought this figure would be higher.
Roughly 38% of crypto traders on CoinStats hold Bitcoin, a figure that’s been declining with time. Bitcoin will continue to lose its dominance as the crypto space grows more competitive.
How much Bitcoin do you have to have to be in the top 1%?
All you need to have is roughly 0.2 Bitcoin ($9,436) to be in the top 1% of Bitcoin wallets. This figure is based on an estimate by Steve Lee, a Google Product Director. Note that this is the top 1% of Bitcoin wallets, not individuals. Unless a massive survey were conducted it’d be impossible to know the top 1% for individuals. This is because most of us have multiple wallets, whether they’re exchange wallets or hardware wallets. Likewise, institutions have assets spread across thousands of wallets for safety. In this article I’ll be pointing out that this figure (0.2 Bitcoin) might even be lower, as scores of smaller investors have come online in 2021. Based on an analysis by Unchained Capital’s Parker Lewis, the amount of Bitcoin you need to own to be in the top 1% of HODLers will decrease with time. This is because Bitcoin’s relative scarcity will only increase.
Bitcoin will become so expensive that it will be more difficult for average investors to purchase 0.2 Bitcoin. If the stock-to-flow model holds true as it has in the past, Bitcoin may be worth over $1 million dollars someday. How will people have the capital to throw $200k down on 0.2 Bitcoin?
Different categories of Bitcoin supply distribution
Glassnode, is a blockchain analytics platform that aims to help traders make decisions based on what’s happening on the Bitcoin blockchain. They recently released an excellent article analyzing the different segments of Bitcoin HODLers. The tiers are:
- Shrimp (<1 BTC)
- Crabs (1-10 BTC)
- Octopus (10-50 BTC)
- Fish (50-100 BTC)
- Dolphins (100-500 BTC)
- Sharks (500-1,000 BTC)
- Whales (1,000-5,000 BTC)
- Humpback Whales (>5,000 BTC)
The following chart from Glassnode illustrates the supply distribution across the categories, including miners and exchanges:
Outside of miners and exchanges, whales and humpbacks account for at least one third of all holdings. These are most likely institutions, funds, and high net worth individuals. For high net worth individuals think Elon Musk, Mark Cuban, and Steph Curry. For institutions think MicroStrategy, Goldman Sachs, and Tesla. For funds think the Grayscale Bitcoin Trust, or Bitwise Crypto Index. Roughly one quarter of all Bitcoin held are by Octopus, Crabs, and Shrimp. This means that retail investors still control a large amount of the coin’s supply. This is good for decentralization, but can be bad for volatility given retail investors get scared and shake out easier when there are price declines. 2021 has been a year where whales and humpbacks have been manipulating the crypto markets to try and shake out retail investors to gain more supply. Don’t let them do it! HODL your Bitcoin forever.
Bitcoin to become more dispersed
What’s going to happen is that even among the institution investment class, Bitcoin supply will disperse. This is because more countries and institutions are taking interest in the blockchain asset class. We have recently seen El Salvador’s (population 6.5 million) adoption of BTC as legal tender, and have rumors of other countries considering the move. On the retail investing side, Bitcoin supply will disperse as well. Retail investors (Shrimp, Crabs, and Octopus) have been the fastest growing cohort of Bitcoin holders. This has been made possible by the growth and popularity of exchanges such as Binance and Coinbase.
Set personal goals
I personally own less than one Bitcoin, but I definitely have a short-term goal to own at least one Bitcoin. And then two. And then five. And then 100. Ask yourself- how many do you own, and what would you like that number to realistically be? Like Guy over at the Coin Bureau, my personal portfolio has a mix of large-cap coins. I don’t only want to hold a single crypto. An example portfolio that looks like mine and Guy’s at CB would be 40% Bitcoin, 30% Ethereum, 20% Cardano, and 10% for smaller projects you believe in. Early in my crypto journey I thought I could tolerate tons of risk and I piled into smaller cap coins. When there was a market correction, I nearly got wrecked. When Bitcoin drops 30% small cap coins can drop 80-90%. It takes a long time and a lot of gains to recover from something like that. Still, there’s something special about being able to own one of something there will only be 21 million of to which people have assigned value and importance. This past year has shown that crypto is moving away from being a niche asset. Institutions like big Wall Street investment banks and crypto trusts like Grayscale have been buying in. This doesn’t mean that we won’t still see corrections. Who knows, maybe Bitcoin will crash tomorrow and it’ll become easier to scoop up!
Getting to the top 1% of Bitcoin HODLers is possible, but the window is closing
Due to inflation, stagnating wages, and a continual increase in the price of Bitcoin, it’s getting harder to become a top 1% holder. You could dump all of your savings into crypto, but that’s not recommended, since crypto is so dangerous and volatile. Top financial advisers (I am not a financial adviser) are recommending clients put less than 5% of their portfolios in cryptocurrency. For me, it’s whatever I’m okay with losing. What this means is that if you’re aiming to follow this advice and you want to be in the top 1% of Bitcoin wallets, you would need a $200,000 portfolio. This way 5% * 200k = 10k, enough to currently buy one fifth of a Bitcoin (~$9,500), the amount needed to be a Bitcoin one percenter.