90% of bitcoin supply mined | BetaShares

90% of bitcoin supply mined

BY Justin Arzadon | 21 December 2021

Bitcoin remained range-bound over the last 7 days, trading between US$45 and 50K. At the time of writing, the price sits at $47,641.

Ether’s price action followed suit and was off -1.77% in the last 7 days vs bitcoin’s -3.27%.

Bitcoin’s market cap is now down to $889.1B, market dominance is sitting at 40.23%, and the value of the entire crypto market dropped to $2.23T.

Price High Low Change from previous week
BTC (in US$) $47,641 $50,724 $45,598 -3.27%
ETH (in US$) $3,979 $4,173 $3,664 -1.77%

Source: CoinMarketCap. As at 19 December 2021. Past performance is not indicative of future performance. Performance is shown in U.S. dollars and does not take into account any USD/AUD currency movements.

News we are keeping an eye on

90% of all bitcoin has now been mined, passing this milestone last week. With a maximum supply of 21 million, more than 18.9 million are currently circulating on the open market. When Bitcoin began in 2009, the reward to miners was 50 bitcoin for each new block added to the chain, which took place approximately every 10 minutes. After every 210,000 blocks added, which takes approximately four years, the mining reward halves. In 2012 it went down to 25, in 2016 down to 12.5 and in 2020, 6.25.  The halving will continue until all 21 million bitcoin are mined around February in the year 2140. Historically, bitcoin’s price has moved in four-year cycles, with the bitcoin ‘halving event’ occurring around the middle of each cycle.

The number of bitcoin mined is not the same as the available supply. Based on data from Chainalysis, it is estimated that up to 3.7 million bitcoin are lost/irretrievable due to lost private keys, death etc., and there is another million bitcoin still sitting in the wallet of Satoshi Nakamoto, the original creator of bitcoin, that will most likely never be moved.1 From on-chain analytics we also know that the majority of bitcoin sits with investors who are long-term holders, or who have a low history of selling. This limited supply is an important factor supporting the price of bitcoin.

In other news, Germany’s network of over 400 savings banks are potentially going to allow their customer base to buy, sell and hold bitcoin and other cryptocurrencies directly from their cheque account. The banks will vote in early 2022 to decide if the project should go ahead. If approved, savings banks across Germany with assets under management of approximately €1.4 trillion will offer their customer base of around 50 million people cryptocurrency trading services.2

Crypto equities

Investors who aren’t necessarily concerned with which cryptoassets will do well, but rather have a view that the whole asset class will continue to thrive and grow, may choose to take a ‘picks and shovels’ approach to crypto, investing their money in the companies that provide the core infrastructure for the crypto economy, instead of in cryptoassets themselves.

One such company is Coinbase, which added 83 assets to its trading list in 2021.3  For Coinbase, an exchange which makes money from trading fees and custodial services, it doesn’t matter which cryptocurrencies survive, but rather that the crypto market continues to grow and their clients have a means of trading those assets.

Coinbase is one of the holdings of the BetaShares Crypto Innovators ETF (ASX: CRYP).

On-chain metrics

This week on-chain, we take a look at the flows of bitcoin held by the Purpose Bitcoin ETF, a spot-based ETF based in Canada. With the most recent drawdown, I thought it would be interesting to see if investors in this ETF have been selling or buying the recent dip.

Citing data from on-chain analytics company Glassnode, the Purpose Bitcoin ETF has seen inflows of roughly $240M over the last two weeks during this drawdown, now holding ~$1.5B in BTC. As per chart below, accumulation of the ETF’s bitcoin holdings has accelerated in the last two weeks.

Bitcoin: Purpose Bitcoin ETF Holdings

Bitcoin: Purpose Bitcoin ETF Holdings

Source: Glassnode.

Altcoin news

The #1 performing altcoin in the Top 50 over the last 7 days was Avalanche (AVAX), returning 33.68%. Avalanche is a direct competitor to the Ethereum blockchain and according to its website “is the fastest smart contracts platform in the blockchain industry, as measured by time-to-finality, and has the most validators securing its activity of any proof-of-stake protocol.”4  

The rally follows a recent research report by Bank of America opining that Avalanche is a credible alternative to Ethereum for DeFi projects, NFTs, gaming and other assets.5

Investing in crypto assets or companies servicing crypto-asset markets should be considered very high risk. Exposure to crypto assets involves substantially higher risk when compared to traditional investments due to their speculative nature and the very high volatility of crypto-asset markets.

Investing in crypto assets or crypto-focused companies is not suitable for all investors and should only be considered by investors who (i) fully understand their features and risks or after consulting a professional financial adviser, and (ii) who have a very high tolerance for risk and the capacity to absorb a rapid loss of some or all of their investment.

Any investment in crypto assets or crypto- focused companies should only be considered as a very small component of an investor’s overall portfolio.

  1. https://www.coindesk.com/tech/2021/12/13/bitcoin-touches-new-milestone-with-90-of-total-supply-mined/
  2. https://www.reuters.com/markets/europe/germanys-trillion-euro-savings-banks-mull-crypto-wallet-2021-12-13/
  3. https://cointelegraph.com/news/listing-frenzy-coinbase-adds-nearly-100-crypto-assets-for-trading-in-2021
  4. https://www.avax.network/
  5. https://www.coindesk.com/business/2021/12/15/bofa-says-avalanches-scaling-capability-offers-viable-alternative-to-ethereum/

This will be the last Off the Chain for 2021, we will return in February 2022. Off the Chain will be published every Tuesday, and provide the latest news on bitcoin and the rest of the crypto market along with analysis and insights into the world of crypto.

It provides general information only and is not a recommendation to invest in any crypto asset, crypto-focused company or investment product.

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