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On-chain data shows millionaires are flocking to Bitcoin

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Demand for Bitcoin multiplied multiple times in 2020. And on-chain data shows that the asset's limited supply may be causing an avalanche.

The Bitcoin FOMO Train

Bitcoin, the world's largest cryptocurrency, saw a boost in demand last year amid a bleak economic outlook, concerns about dollar inflation, weakened fiat currencies, incessant money printing, and low returns on traditional assets.

The rally even saw institutional players sit down and take note of the asset as it broke its previous all-time high of $ 19,800 to as much as $ 41,750 in December 2020. Some of these include multi-million dollar funds such as Guggenheim Partners, which presented their interest in BTC with the US SEC last year.

Others took the step. Paul Tudor Jones, a billionaire investor and director of Tudor Investments, placed almost 2% of his capital in the asset class, claiming it was a "big speculation" but the "fastest horse" among all other assets on the open market. .

Tech companies also participated. Financial technology service Square, owned by Bitcoin advocate and Twitter founder Jack Dorsey, invested $ 50 million of its treasury funds in BTC, stating that it was an instrument of "economic empowerment and provides a way for the world to participate in a global monetary system."

But that didn't overshadow the purchase of Bitcoin from business intelligence firm MicroStrategy, like Chad. As of August 2020, the company built a $ 1 billion position in the asset. His biggest purchase came in December when he raised $ 650 million and used the proceeds to buy more Bitcoin.

What the chain data says

Despite the volumes, institutional interest in Bitcoin is just beginning. On-line analyst Willy Woo said in a tweet today that the "whale spawning" season was here, as shown by a record number of large Bitcoin transactions.

Woo further mentioned:

“The world has 47 million millionaires, 71% of them live in the US or the EU, there are only 14.9 million BTC in circulation and only 4.1 million BTC are liquid and therefore , you can buy them".

Such a liquidity contraction on the sell side likely caused record Bitcoin purchases in the past month, which, in turn, pushed the asset's price over $ 23,000 and above, Woo said.

Meanwhile, Woo added that the data showed that the supply of 4.1 million "liquid" coins (or those that were available for sale) was steadily falling amidst the stimulus and money printing rounds. An observation that suggested that the market currently has few sellers.





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