According to a report released by Fidelity Digital Assets on Monday, the number of Bitcoin wallets holding $1,000 or more has experienced a significant 20% increase since the beginning of 2024.
This ongoing accumulation among smaller addresses reached a record high of 10.6 million on March 13, nearly doubling from 5.3 million in 2023, representing a 101% rise.
Despite the upward trend in Bitcoin prices, this sustained increase in smaller addresses acquiring and holding the cryptocurrency may indicate a growing distribution and adoption among the “average” person. However, Fidelity noted that price appreciation during the period and address consolidation might affect the accuracy of these figures.
As of April 25, Bitcoin has seen an impressive 89% surge in the past six months, with its last trading price around $64,150.
Self-custody gains popularity
The Fidelity report also highlighted a decrease in the amount of Bitcoin held on exchanges since its peak in 2020. Various exchange failures in 2022 and other problematic practices have driven the popularity of self-custody among Bitcoin holders throughout 2023. This trend continued in Q1 2024, with exchange balances further declining to nearly 2.3 million BTC, marking a 30% decrease from all-time highs and a 4.2% decline over Q1 2024:
Fueled by multiple major exchange collapses in 2022 and other troubled exchange practices, self-custody has become a major part of the bitcoin journey throughout 2023. Q1 2024 was no different as balances on exchanges continued to dwindle.
Fidelity emphasized the importance of monitoring the drop in available Bitcoin on exchanges in 2024, as it underscores the significance of alternative custody methods like self-custody. However, the decrease in exchange balances does not necessarily indicate a corresponding increase in self-custody.
Unusual holder outflows
The report also addressed changes in the net position of holders, who typically hold Bitcoin for the long term. From Q3 to Q4 2023, the average net position dropped from 40,442 BTC to 31,376, with a notable decline at the end of 2023. Despite a slight recovery in late February, this group continued to experience significant outflows, possibly influenced by Bitcoin’s new all-time high.
This occurrence before the halving is unusual compared to past cycles, suggesting that these investors may perceive Bitcoin as being heavily overvalued before the halving. Current outflows amount to about 124,001 BTC, challenging the traditional Bitcoin halving pattern.
The situation following this latest halving event is significantly different from the past, when the price saw a significant increase. Bitcoin has seen its price remain stable, and even its fees fall following the event.
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