According to a new report from Fidelity, 17% of the total Bitcoin is officially classified as 'old Bitcoin', meaning it hasn't been moved in at least ten years. The value of these assets is approximately $360 billion.
It is concerning that Fidelity claims the number of Bitcoin becoming old daily exceeds what new mining machines can replace. Between this trend and acquisitions by companies, Bitcoin's role as a traded currency may be at risk.
Is old Bitcoin taking over?
Thanks to the HODLing trend, Bitcoin does not lack a large number of Bitcoin whales holding their assets for years. However, the cryptocurrency industry is over 15 years old, and the number of 'old' tokens is likely to be continuously increasing.
Fidelity conducted a study on Bitcoin in its early days, reaching several important conclusions:
Fidelity is a leading entity in issuing Bitcoin exchange-traded funds, so it is natural for them to have a significant interest in conducting this research. At first glance, the claim that 17% of all Bitcoin is old seems surprising. The company estimates that 3.4 million Bitcoin fall into this category, valued at over $360 billion.
However, Fidelity's findings regarding mining may be more comprehensive. The company specifically noted that the amount of Bitcoin being aged daily exceeds the amount of new coins being mined. Additionally, the mining industry has become less profitable, and ETF issuers are buying amounts of Bitcoin that far exceed what miners can produce.
Fidelity found that 566 tokens become old daily, while only 450 new tokens are replaced.
The 'lost' old supplies are a cause for concern.
One of the major concerns is the loss of part of the old supply, due to reasons such as neglecting private keys or inability to access wallets. Blockchain data indicates that around 20% of the total mined Bitcoin has been permanently lost.
On another front, more than 1.8 million Bitcoin have remained dormant with Satoshi Nakamoto for over ten years. When coins are completely lost, the actual circulating supply decreases, altering supply and demand dynamics.
A decrease in active supply may exacerbate price volatility. As the maximum supply of Bitcoin approaches, each gradual withdrawal from active trading narrows the available trading range.
Moreover, the risk of concentration increases as fewer active coins remain. Whales can move the market more easily if active supply decreases.
