According to a report published on Monday by Fidelity Digital Assets, the number of Bitcoin wallets holding $1,000 or more has increased significantly by 20% since the beginning of 2024.
This sustained accumulation of smaller addresses reached a record high of 10.6 million on March 13, nearly doubling from 5.3 million in 2023, an increase of 101%.
Despite the upward trend in Bitcoin prices, this continued increase in smaller addresses purchasing and holding the cryptocurrency could indicate growing penetration and adoption among the “average” person. However, Fidelity noted that price increases during the period and address consolidation could affect the accuracy of these numbers.
As of April 25, Bitcoin has seen an impressive 89% increase over the past six months, with the last trading price at around $64,150.
Self-custody is becoming increasingly popular
The Fidelity report also highlighted a decline in the amount of Bitcoin held on exchanges since its peak in 2020. Various exchange outages in 2022 and other problematic practices have propelled the popularity of self-custody among Bitcoin holders throughout 2023. This trend continued in the first quarter of 2024, with forex holdings continuing to decline to almost 2.3 million BTC, a 30% decline from the all-time high and a 4.2% decline from the first quarter of 2024:
Due to several major stock market collapses in 2022 and other problematic exchange practices, self-custody has become an important part of Bitcoin’s journey throughout 2023. The first quarter of 2024 was no different as balances on the stock exchanges continued to shrink.
Fidelity emphasized the importance of monitoring the decline in available Bitcoins on exchanges in 2024, as this underscores the importance of alternative custody methods such as self-custody. However, the decline in foreign exchange holdings does not necessarily mean a corresponding increase in self-custody.
Unusual holder outflows
The report also looked at changes in the net position of holders who typically hold Bitcoin for the long term. From Q3 to Q4 2023, the average net position fell from 40,442 BTC to 31,376, with a significant decline at the end of 2023. Despite a slight recovery in late February, this group continued to see significant outflows, possibly influenced by the new all-time high.
This pre-halving occurrence is unusual compared to previous cycles, suggesting that these investors may perceive Bitcoin to be severely overvalued ahead of the halving. Current outflows are around 124,001 BTC, challenging the traditional Bitcoin halving pattern.
The situation after this recent halving event is significantly different from the past when the price increased significantly. The price of Bitcoin has remained stable and even fees have decreased after the incident.