Bitcoin’s $2.05T Market Cap Reflects Growing Institutional and Retail Divide

Once again, Bitcoin has reasserted its dominance in the cryptocurrency landscape, where it now commands a total market capitalization of about $2.05 trillion.

At just over $103,000 per coin, the largest digital asset not only leads the pack in valuation but is also evolving in how its supply is dispensed among different classes of holders. New data show a clear and clean breakdown of the Bitcoin supply landscape across three distinct tiers. And if you want to sell them to anybody, these are the guys to sell them to.

At the same time, the crypto universe continues to experience steady growth in the number of wallets, with Bitcoin far outpacing its nearest rivals in the creation of new addresses on a daily basis. Let’s take a deeper look at what these numbers show us concerning the changing dynamics of not just the Bitcoin network but the digital asset world at large.

The 21 million coin limit of Bitcoin means that it can only ever have that number of coins in existence. Those coins are now distributed among a range of wallets. The wallets can be divided into three categories: retail users, institutions, and liquidity providers.

The individuals or small investors that tend to hold BTC in lesser amounts are the ones we call retail holders. Retail holders control wallets that contain less than 10 BTC. Collectively, they hold 3.47 million BTC, for 17.5% of the overall supply. They are the largest segment by wallet count, but this segment’s influence over the total supply remains limited. Despite this limited influence, the growing engagement of retail holders serves as the bedrock of decentralized participation in the Bitcoin network.

In contrast, the bulk of Bitcoin is owned by institutions and large entities. Wallets with between 10 and 10,000 BTC hold 13.5 million BTC, or 68% of the supply. This group encompasses hedge funds, asset managers, public companies, and other financial entities. Their growing stake in Bitcoin over the past several years has seen the asset substantially secure its status as a legitimate store of value and an increasingly credible hedge against the traditional market’s volatility.

To conclude, the 2.87 million BTC held by liquidity providers and exchanges—wallets that each hold more than 10,000 BTC—represents 14.5% of the

total BTC supply. These liquidity providers and exchanges are critical to the operation of trading platforms and the large-scale settlement of BTC. Their concentration of holdings, however, makes them and the trading platforms they use a centralization risk in a BTC economy.

Despite its fixed supply, Bitcoin’s ongoing adoption ensures that the cryptocurrency is anything but stagnant. In the last month, Bitcoin topped all of its crypto competitors when it came to generating daily new wallets. On average, this network brought in an astounding 309,000 freshly created wallets each day—making the deep accessibility and appeal of Bitcoin beyond question, even at prices exceeding $100,000. Retail investors, alongside a recent uptick in interest from developers, appear hardly deterred by Bitcoin’s cost.

The second-largest cryptocurrency by market cap, Ethereum, has 112,000 daily new wallets. Tether, the leading stablecoin, sees an average of 36,400 daily wallets. XRP sees an average of 3,500 daily new wallets.

These metrics highlight Bitcoin’s function as the access point for the majority of fresh entrants to the crypto space. Its combination of name recognition, immense liquidity, and established security makes it the go-to choice for both retail and institutional investors.

The present supply structure of Bitcoin shows that it has developed into an asset class with characteristics of a maturing structure. A class that is now largely dominated by institutional investors. To the extent that Bitcoin is now largely in the hands of institutions, which is a favorable sign for it becoming a more institutional-grade asset. Meanwhile, retail investors might not have the same kind of total holding power as institutions (by a long shot), but they are coming into the Bitcoin ecosystem in droves, in what feels like an almost Trumpian loyalty.

Besides, as liquidity suppliers keep on holding huge amounts, market efficiency is probably going to improve, though it may come at the cost of more discussions about centralization.

The continuous increase in the creation of wallets indicates that the interest in cryptocurrencies is still solidly growing. The infrastructure, security, and credibility of prominent networks such as Bitcoin seem to be getting stronger all the time. As this trend continues, those of us in the crypto space can expect to see a much wider dispersion of ownership that likely reaches across an even greater number of users in the future—potentially leveling the tiered system that we have now.

Having a market capitalization of $2.05 trillion, Bitcoin is more than just an experiment in decentralized finance. It has become a bona fide financial asset class. Its supply is largely held by institutions, but retail enthusiasm is off the charts, as can be seen with the unprecedented creation of new wallets. On a daily basis, Bitcoin is the decentralized, dual-powered engine driving both transformation of the old world of finance and construction of individual financial sovereignty.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

Follow us on Twitter @themerklehash to stay updated with the latest Crypto, NFT, AI, Cybersecurity, and Metaverse news!

The post Bitcoin’s $2.05T Market Cap Reflects Growing Institutional and Retail Divide appeared first on The Merkle News.