Summary Bitcoin's transparent yet anonymous blockchain is at the base of its potential as a global reserve asset, balancing traceability and privacy for long-term holders. On-chain data shows declining exchange balances and stable active addresses, supporting my thesis that Bitcoin is increasingly held for long-term reserve purposes. Ownership analysis reveals about 40% of Bitcoin is traceable, with significant institutional and government holdings, but risks remain from unknown or dormant wallets and some of my assumptions. Despite short-term volatility and risks, I maintain a STRONG BUY rating, viewing Bitcoin as an asymmetric bet with long-term upside toward gold-level market capitalization. I have consistently covered Bitcoin ( BTC-USD ) with a bull thesis on Seeking Alpha, most recently describing how a US sovereign debt crisis might act as a catalyst , drawing some parallels with Japan and Italy and their respective debt crises. One of the unique elements about the blockchain, Bitcoin’s underlying technology, is that it is effectively an online ledger, openly accessible to everyone. That makes Bitcoin anonymous yet very transparent, as all transactions and owners (in the form of wallets) can be tracked. Today, I will provide an analysis based on on-chain data and what that says, in my opinion, about the development of Bitcoin as a global reserve asset. I will specifically focus on Bitcoin ownership, trying to answer the below questions: Who owns Bitcoin today? And how is Bitcoin’s ownership evolving over time? How can we expect BTC owners to behave? What does Bitcoin’s ownership say about Bitcoin’s broader investment thesis? My case for Bitcoin: balanced between scarcity, anonymity and traceability I invite readers that are not familiar with Bitcoin to review my original bull thesis from May 2024, my first update based on on-chain data and my more recent article outlining the fundamentals of why buying Bitcoin in the first place. I am not going to repeat my full thesis here but, in a nutshell, I have been bullish on Bitcoin for years because I think it represents a hard, incorruptible, asset with all the characteristics needed to be a perfect global reserve asset. I see it as durable , fungible , portable , divisible , verifiable and - most importantly - extremely scarce in comparison to gold, the prime global reserve asset today. Bitcoin is the culmination of two decades of evolution of its underlying technology, the blockchain. Projects like eCash, Bit Gold and B-money preceded Bitcoin and made its creation possible. The blockchain went on to be used for thousands of cryptocurrencies, but none matured to Bitcoin’s market capitalization, nor today there is a credible challenger of Bitcoin in its role as a reserve asset, in my view (incidentally, most crypto projects do not aim at competing with Bitcoin in the first place). Even if the blockchain is very transparent in itself, the identity of wallet holders is not public, nor easy to trace. This is, in my view, also one of Bitcoin’s strong points: while mass-tracking of wallet ownership is a hard and labor intensive job (making it difficult for governments or agencies to do it at scale), it is relatively easy to track single malicious actors. There are plenty of examples of prominent fraudsters who have been arrested thanks to the transparency of the blockchain and the work of law enforcement and developers alike. A recent example is that of Down Kwon, a South Korean fraudster who was extradited to the US after escaping his home country and identified when cashing out Bitcoin in Serbia. This balance between anonymity and transparency is, in my view, what makes Bitcoin less than ideal as a vehicle for frauds or laundering money, but perfect as a global (incorruptible, unsizeable at scale) reserve asset . When it comes to frauds, other crypto projects like Monero USD ( XMR-USD ) have been created with untraceability in mind and are more akin to that purpose. US dollars in cash are still by far the preferred way for criminals to launder and circulate their money. Ultimately I think Bitcoin, even as it is close to ATHs, remains an asymmetric bet on actually maturing into a global reserve asset. My personal investment thesis for Bitcoin, which remains unchanged against my past coverage, is summarized below. Bullish & Bearish cases for BTC (Author's work) My bullish case sees Bitcoin roughly matching gold in market capitalization and being worth $ 750,000 per coin, while my bearish scenario sees Bitcoin becoming an equivalent of an online casino, trading indefinitely at around the $ 50,000 price point. Assigning different probability to different scenarios, I see an expected value of a Bitcoin bet between $ 112,500 and $ 200,000. Who owns Bitcoin? To understand who owns Bitcoin, we need to rely on past and present information about wallet owners, collected through the fifteen years old history of Bitcoin by developers, analysts and other institutions. This article from Kraken does a good job at summarizing key Bitcoin holders. Together with data from key Bitcoin ETFs issuers and CoinGecko , I have compiled the following table, outlining key institutions that own Bitcoin to date. I have no affiliation with any of the institutions I use for my sources or mention in this article. Institution Amount of BTC (est.) % of Total BTC Supply Notes Crypto Exchanges ~2,170,000 ~10.3% Considers all BTCs on exchanges tracked by Coinglass Major Bitcoin ETFs (IBIT, FBTC, GBTC) 1,800,000 ~8.7% Mostly retail owned, even if certain data about ownership doesn’t exist. Satoshi Nakamoto 1,100,000 5.24% Founder of Bitcoin, whose wallets are known and considered lost forever. MicroStrategy, Incorporated ( MSTR ) 597,325 2.84% Largest corporate holder, accumulating since 2020. US Government 198,012 0.94% Mostly holds BTC from seizures (e.g., Silk Road). Chinese Government 194,000 0.92% Mostly holds BTC fromPlusToken scam seizures. Other Governments ~79,000 ~0.4% Includes El Salvador (5,963 BTC), Bhutan (12,578 BTC), UK (61,000). BTC Miners ~92,000 ~0.44% Includes data from MARA Holdings ( MARA ), Riot Platforms, Inc ( RIOT ), CleanSpark, Inc. ( CLSK ), Hut 8. Winklevoss Twins 70,000 0.33% Early Bitcoin investors Other Companies ~37,000 ~0.18% Includes Tesla, Block, Metaplanet, and Galaxy Digital. Tim Draper 30,000 0.14% Venture capitalist who acquired his Bitcoins in 2014 Total (Institutions) 30.4% “Lost” BTC (excl. Satoshi Nakamoto’s wallets) ~1,600,000 ~7.5% Lower end of estimates In summary, we can roughly estimate the identity of Bitcoin holders for ~30% of Bitcoin’s total supply. To note, not all of Bitcoin’s supply is available. There are still ~ 5% of Bitcoins that have not yet been mined and they will be mined only through the coming century. Net, I think it is fair to assume we roughly know the owners of one third of Bitcoin in circulation today. Additionally, we know that at least 7.5% of all Bitcoins are lost forever , bringing the total (relative to existing Bitcoins) to just around 40%. The remaining ~60% constitutes BTC addresses that cannot be traced to any institution and/or cannot be precisely assessed at this point in time. This in itself constitutes a risk for a bullish thesis in Bitcoin, which I will cover later in the risk section, together with some limitations of my table above. The questions I will now ask myself are: how will these owners behave? And how does their behavior impact a bullish investment case for Bitcoin? What is Bitcoin used for? My bullish investment case for Bitcoin sees the cryptocurrency maturing into a global reserve asset. With that thesis in mind, I think there are generally three (plus one) behaviors that I can outline for what concerns holders: Holding long term - as anyone believing Bitcoin will be the next gold would reasonably at the very least wait for it to mature into a global reserve asset before considering selling. Trade it short term - to profit from its relatively high volatility. Cashing out after a long term hold - for example, early Bitcoin adopters and miners wanting to realize, at least partially, their sizable profits. Use it for its intended original purpose as a digital currency , that is to buy products or services. Of the above behaviors, I see the second and third ones as potentially negative in the short term for my long term bull thesis, but ultimately needed for it to materialize (while the first, obviously, is good for it). For what concerns short term trading, this is a behavior that helps make the market efficient . Short term traders take profit from arbitrage opportunities and make sure the market remains liquid and less volatile. This is not only a dynamic for Bitcoin, but one to be expected for any major liquid asset. The third phenomenon, which may seem detrimental at first, is the exact opposite in my opinion. For Bitcoin to mature into a global asset, this must eventually pass hands from original holders (or skeptical investors) to institutional investors who believe in the thesis. It is a process that while may put some headwind on Bitcoin’s price short and mid term, is needed for a bullish thesis to materialize in the long run. The fourth behavior is, on the other hand, detrimental to my thesis. I detailed this concept multiple times in my past coverage and I am not going to cover it extensively again. In short, Bitcoin was born as a means of digital payments but really ended up developing as a reserve asset (“digital gold”). The final “proof” of such a development in my opinion was the Bitcoin Cash ( BCH-USD ) hard fork of 2017, when developers who sustained the original objective of Bitcoin went on with their own version of BTC, which failed to date. In the table below, I summarized my personal assessment of what behavior each institution is more likely to exhibit in the future. HOLDERS ACTIVE TRADERS CASH OUT BTC “LOST” Strategy ( MSTR ) Crypto Exchanges Some Governments Satoshi Nakamoto Bitcoin ETFs Some Companies Lost Bitcoin US, Chinese and some Governments Winklevoss Twins & Tim Draper Some companies Of course, this classification is up to debate as surely none of these institutions fall into one category only. Bitcoin ETFs, for example, are also used for active trading. However, I think they are mostly used for longer term holding - something consistent with their staggering increase in AUMs since launch. Crypto Exchanges are also difficult to place, as they act as the center of any Bitcoin trade by definition - whether that involves cashing out Bitcoin held for a long time, actively trading Bitcoin or even, in some cases, holding it. The point of this chart is not to offer a perfect ranking, but to help readers understand possible behaviors of each type of Bitcoin holder - something that I will cover next. What does On-Chain data say about a Bitcoin Reserve Asset bull case? To understand what “behaviors” are becoming more prominent over time (and how this affects an investment in BTC), once again on-chain data can be helpful. Specifically, I like looking at Bitcoin Exchange Balance, i.e how much Bitcoin is on exchanges and how is that figure evolving over time? Curiously in my view, Bitcoin in exchanges peaked around 2020 , just before the 2020 BTC bull run and have been on a slow decline afterwards . BTC on exchanges All Time (MacroMicro) I see this behavior as moderately bullish - indicating that the prevailing long term sentiment is that of pulling Bitcoins out of exchanges for independent storage. This is something that only makes sense, in my view, if holders plan to store and hold Bitcoin long term, a behavior that is consistent with my bullish case for Bitcoin (waiting that it matures into a global reserve asset). Another key metric I find moderately bullish is the number of active addresses on the Bitcoin network. This metric has been stabilizing around 2020 levels , and then even slightly declining in the last couple of years. While this is bearish for anyone believing in Bitcoin as a global payment network, it is in my opinion bullish in the context of a bullish reserve asset theory. Active BTC addresses, All Time (The Block) I see a declining or stagnating number of active addresses on the BTC blockchain as consistent with a “Holding” behavior . That is to say, institutions and investors that are not actively using Bitcoin for purchasing goods and services, or actively trading it - but rather waiting for game theory to play out and for Bitcoin to mature. This observation is further confirmed by the number of transactions on the Bitcoin network , which similarly to the number of active addresses has plateaued in recent years, with the only difference being a spike in activity in 2021 and 2022. Transactions on the BTC Blockchain (The Block) I attribute this spike to the BTC ordinals craze of those years. BTC ordinals, in short, are an NFT equivalent on the Bitcoin blockchain whose main investment narrative took its course within the crypto community in the last 3 years or so. The fact that transactions are now subduing to the levels of 2020 is, in my view, once again a confirmation that the Bitcoin blockchain today is not really serving any significant purpose except that of serving long term holders in their (relatively rare) transactions. If I saw a significant and sustained spike (or uptrend) in transactions, I would have argued that perhaps short term traders were taking over. In that scenario, Bitcoin could be becoming an “online casino” (which is also my bear thesis for Bitcoin) where the only value of Bitcoin stems from its volatility. So, even if it sounds paradoxical, a decline or stagnation in transactions is actually bullish in the context of my investment thesis for Bitcoin. Finally, the last metric I am looking at to gauge my bullish thesis is the percentage of BTC supply in profit. BTC in profit, 2017 to date (The Block) As seen from the above chart, the vast majority of BTC addresses are currently in profit , at 97% at the time of writing. While this per se is not an indicator of any type of behavior, I see it as a sort of reassurance that we are less likely to see any significant cash out in the short or medium term. That’s because I find it is easier to hold your Bitcoin for the long term (and believing in the global reserve asset narrative) if you are sitting on profits. The fact that Bitcoin’s price has been sitting above $ 100K for more than two months this year also tells me that investors who wanted to cash out at around current levels have likely already done so. Limits and risks of my on-chain analysis Looking at Bitcoin through the Blockchain is a fascinating exercise, unique to this type of asset. However, there are some limitations and risks coming from the very fact that the blockchain is transparent but anonymous. For starters, my Bitcoin ownership table has some limitations. It is not mutually exclusive, meaning that for example BTC held by Crypto Exchanges may overlap with other institutions (if some of these custody BTC with an exchange). I expect most overlaps to be between ETFs and Crypto Exchanges (as most Bitcoin ETFs utilize Coinbase as custodian for their holdings). Another limitation concerns the fact my estimates are fairly conservative. The number of “lost” Bitcoin, for example, is estimated in various ranges by different sources and I took an average on the low, conservative end. The same applies to Bitcoin miners. There are many more current and past BTC miners that hold Bitcoin on top of the ones I mentioned. The issue here is that many are either out of business (if they mined Bitcoin in the early 2010s) or not public. For example, an old wallet that did not move for more than 10 years recently cashed out their Bitcoin and it is rumored to be belonging to an early miner. Generally, I preferred to adopt a conservative approach and always rely on existing data rather than taking random assumptions. Even if I find these limitations workable, as my aim is to analyze owners’ behavior rather than pinpointing exact ownership, they still are something readers should keep in mind. There is also a broader risk linked to the fact that, at this point in time, I could only reasonably identify Bitcoin’s ownership (and relative behaviors) for what concerns roughly 40% of Bitcoin's existing supply. Even accounting for the conservativeness of my estimates, that leaves at least half of Bitcoin’s supply in a gray area. While all the charts I showed account for total Bitcoin activity (including those of wallets whose ownership cannot be traced), there is still a risk in the unknown. For example, long time dormant wallets could “wake up” and decide to cash out, becoming a headwind on Bitcoin price at least in the short term. There is no amount of blockchain screening that can predict that sort of sudden behavior, rotted in human nature. More broadly, Bitcoin remains in my opinion an asymmetric bet with a relatively high risk for a high reward. The fact it has all the technical characteristics to become a global reserve asset does not mean it actually will become so. For that to happen, it will take time and institutional adoption. While I am personally bullish on Bitcoin I recommend readers to inform themselves and only be exposed to an extent that is coherent with their risk attitude and investment objectives. Conclusion To quote Gate’s Law , most people “overestimate what can happen in the short term and underestimate what can happen in the long term”. Based on on-chain data, I think Bitcoin’s maturity towards becoming a global reserve asset continues, slowly but steadily. Investors that expect outsized returns in the short term may be in for a disappointment. On the other hand, I believe patient investors will be rewarded. Bitcoin is an apolitical, technically (close to) perfect global reserve asset. In today’s increasingly polarized world, I continue betting on it. Seeing an upside of up to $ 750,000 per Coin (competing with gold in market cap), I see this as an asymmetric bet and I recommend once again a STRONG BUY.