For different reasons, some Bitcoin (BTC) addresses are known not to transact for years despite holding a significant amount of money in the digital asset, casting the addresses into a dormancy state.
Notably, the number of Bitcoin held in such addresses continues to grow. As of August 22, the cumulative number of Bitcoin held in dormant addresses over the last five years attained an all-time high of 17.87 million BTC, data by Bitinfocharts indicates.
From the data, the Bitcoin in dormant addresses accounts for over 90% of the 19.12 million BTC currently in supply. The highest ranked dormant address has 79,957 BTC worth about $1.6 billion based on Bitcoin’s market value of $21,200 by press time. Cumulatively, the top five dormant addresses hold 185,096 BTC worth $3.9 billion.
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Notably, a dormant Bitcoin address refers to addresses with no outgoing transactions for a certain period with a non-zero balance. Several factors account for dominance in such addresses.
Drivers for dormant accounts
The HODLing investment strategy accounts for a significant share of the addresses. Notably, despite the volatility associated with the cryptocurrency market, several investors are betting on a future rally to cash out.
It is also worth mentioning that cryptocurrencies have emerged as a means to make quick profits despite market corrections.
Additionally, some dormant accounts entail inaccessible funds, mainly through the loss of private keys or the physical wallet. There is a possibility individuals can forget or lose their passwords and ultimately lose their cryptocurrencies. Therefore, holdings of the top dormant BTC addresses may fall under this lot.
Elsewhere, stolen coins are mainly due to incidents like hacking accounts for a share of the dormant addresses in a bid to avoid investigations. It is worth noting that in recent years, despite the anonymity of cryptocurrencies, investigators have managed to trace stolen funds by tracking their movements from one address to another.
Role of early investors
Furthermore, some of the wallets are from the early eras of Bitcoin. Early holders who invested in the asset and maintained their stakes have evolved into Bitcoin whales. The reactivation of such wallets has an immense impact on the BTC market trends.
For instance, the movement of Bitcoin from old inactive wallets occurs during a bullish run for the owners to maximize profits in return, causing market volatility.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
