- The difference between the number of transactions and transaction volume in May indicated that retail investors were dominant.
- The number of coins in self-custody continued to rise steadily.
The crypto space was devastated by one of the biggest implosions ever in May 2022: the collapse of Terra [LUNA] token, marking the beginning of the bloody bear market. Prices of the top digital assets went downhill and have yet to recover from the shock.
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Typically, such situations test the resilience of individual investors who are the first to exit the market out of fear of further losses. Surprisingly, this has not been the case.
Retail holders of Bitcoin [BTC] That is, addresses with less than 10 BTC increased their relative share of the circulating supply from 13.7% after LUNA’s collapse to 17.54% on June 13, according to on-chain analytics company Glassnode. This amounted to an increase of 790,000 BTC for their wallets.
Source: Glassnode
What is fascinating to note is that this cohort, consisting of shrimp (holding less than 1 BTC) and crabs (holding between 1-10 BTC), saw another surge in its share after the FTX bankruptcy episode. This was, among other things, an indication of the increased demand for self-preservation.
Smaller entities are gaining prominence
A major criticism of Bitcoin since its inception has been its lack of usability, which has discouraged individual investors from actively participating in the network. However, this cohort jumped on board with more enthusiasm in 2023 after the Ordinals protocol enabled the mass minting of both fungible tokens such as BRC-20 and non-fungible tokens (NFTs).
As shown in the chart below, last month the Bitcoin network witnessed an unprecedented spike in daily transactions, to the extent that top exchanges had to suspend withdrawals due to high transaction fees.
While the number of transactions increased, the transfer volume, i.e. the total number of coins transferred, was disproportionately low. This meant that the frenzy was driven by low-value transactions typically conducted by retail holders of the coin.
Source: Glassnode
Read Bitcoin [BTC] Price Forecast 2023-24
Self-preservation is steadily increasing
After a brief increase to $26,000, BTC fell back to $25,877.11 at the time of writing, according to Santiment. The coin has lost 5.85% of its value in the past month. Despite this, the number of coins in self-custody has gradually increased over the same time. This is indicative of the network-wide accumulation trend.
Source: Sentiment